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Case study RUTH CHRIS

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Running Head: RUTH CHRIS CASE STUDY
RUTH CHRIS CASE STUDY
Introduction
The name Ruth Chris’s Steak House conjures up a mouthwatering steak, potato and perhaps some
fresh seafood with a medley of fresh veggies on the side. Not only does the name invoke instant hunger,
the company is a multi-million dollar franchise founded by Ruth Fertel in 1976. The company’s vice
president Dan Hannah, is looking to expand its franchise base in the international arena however,
several issues hinder the process. These issues will be identified in the ensuing paper. In addition to the
issues, critical international concerns will be addressed and will be coupled with recommended solutions
to counteract the concerns. Based on the recommended solutions certain impacts will transpire and will
affect the company. These impacts will be factored into this paper along with the most important
concepts taken away from case study of Ruth Chris.
Ruth Chris Case Study
Major and Minor Problems
Ruth’s Chris Steak House does not encounter problems when it comes to the food and customer
service it provides. However, problems will arise when the company can not decide where and how to
get Ruth’s Chris to the next level. The company has 93 restaurants, 42 of which are company-owned and
the remaining 51 franchised owned. One restaurant had to close due to the damage from Hurricane
Katrina bringing the total to 92. The company has restaurants located in Canada, Hong Kong, Mexico and
Taiwan. All have been profitable.
The name alone attracted many want to be franchisers from all over. However, the company had
strict conditions on acceptance:
1. “Liquid net worth of at least $1 million USD
2. “Verifiable experience within the hospitality industry”
3. “Ability and desire to develop multiple locations”
(Kupetz and Alon, 2006)

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The strict criteria above reduced the number of prospects. Additionally the cost alone of “$100,000 USD
per restaurant franchise, a royalty fee of five percent of gross sales and a two percent of gross sales
national advertising fee scared off those who were qualified (Kupetz and Alon).
The company faced new challenges. These challenges came from the company’s recent initial public
offering (IPO) in 2006 and the direction in which to take the Ruth Chris next. With the IPO, Ruth met
with new expectations, those of its shareholders and pressure for revenue growth weighed heavily on
the minds of senior management. This led to senior management having an in-house debate about
whether or not to expand into additional international franchises.
The company was “seeing consistent incremental revenue growth, but new restaurants were critical”
(Kupetz and Alon, 2006). Dan Hannah, the vice-president for business development saw the
opportunities in the international sector from the success of the restaurants already place in Canada,
Hong Kong, Mexico and Taiwan. However, the dilemma lay in where to look to expand its new
international franchises and the country or countries to be the new homes to Ruth Chris. Hannah
realized the dilemma he faced and they did not come without a range of issues to deliberate.
Critical Issues
Hannah’s experience in the restaurant franchising business led him to believe that the company
should look for new markets. Although his belief is well intentioned he had a few issues to iron out. First
he had to figure out “which market to enter first” (Kupetz and Alon). Second, he had to consider if the
company should “continue to be Ruth’s exclusive international mode of entry” (Kupetz and Alon). Third,
he had to think if “there were opportunities for joint ventures or company-owned stores in certain
markets” (Kupetz and Alon). Fourth, he had to figure out “how he could identify and evaluate new
potential franchises” (Kupetz and Alon). Finally, if there “was an opportunity to find a global
partner/brand with which to partner” (Kupetz and Alon).
In Hannah’s attempts to explore the possibilities of expanding, Hannah considered Igor Ansoff’s
Product-Market Growth Matrix. This matrix consists of four models: product development,
diversification, penetration, and market development (see figure 1 below). The matrix is divided into
four different strategies:
Market Penetration the firm seeks achieve growth with existing products in their current
market segments, aiming to increase its market share.”
Market Development- the firm seeks growth by targeting its existing products to new market
segments.
Product Development the firm develops new products targeted to its existing market
segments.”
Diversification the firm grows by diversifying into new businesses by developing new
products for new markets.

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Running Head: RUTH CHRIS CASE STUDY RUTH CHRIS CASE STUDY Introduction The name Ruth Chris’s Steak House conjures up a mouthwatering steak, potato and perhaps some fresh seafood with a medley of fresh veggies on the side. Not only does the name invoke instant hunger, the company is a multi-million dollar franchise founded by Ruth Fertel in 1976. The company’s vice president Dan Hannah, is looking to expand its franchise base in the international arena however, several issues hinder the process. These issues will be identified in the ensuing paper. In addition to the issues, critical international concerns will be addressed and will be coupled with recommended solutions to counteract the concerns. Based on the recommended solutions certain impacts will transpire and will affect the company. These impacts will be factored into this paper along with the most important concepts taken away from case study of Ruth Chris. Ruth Chris Case Study Major and Minor Problems Ruth’s Chris Steak House does not encounter problems when it comes to the food and customer service it provides. However, problems will arise when the company can not decide where and how to get Ruth’s Chris to the next level. The company has 93 restaurants, 42 of which are company-owned and the remaining 51 franchised owned. One restaurant had to close due to the damage from Hurricane Katrina bringing the total to 92. The company has restaurants located in Canada, Hong Kong, Mexico and Taiwan ...
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