Harvard Case - Desi Shack: Location Choice in the Big Apple
"Desi Shack: Location Choice in the Big Apple" Harvard business case study is written by William R. Kerr, Alexis Brownell. It deals with the challenges in the field of Entrepreneurship. The case study is 32 page(s) long and it was first published on : Aug 13, 2013
At Fern Fort University, we recommend that Desi Shack pursue a multi-pronged approach to expansion in New York City, focusing on a hybrid model of physical locations and online presence. This strategy will leverage the company?s strong brand recognition and loyal customer base while mitigating risks associated with a solely brick-and-mortar expansion.
2. Background
Desi Shack, a popular Indian food restaurant chain with a strong presence in the Midwest, is considering expanding into New York City. The company faces the challenge of selecting the right location and navigating the competitive landscape of the Big Apple?s diverse culinary scene.
The main protagonist is the founder and CEO, Rajeev Patel, who is passionate about bringing authentic Indian flavors to a wider audience. He is faced with the crucial decision of how to best leverage Desi Shack?s existing brand equity and operational expertise to achieve sustainable growth in a new, highly competitive market.
3. Analysis of the Case Study
This case study can be analyzed through the lens of several frameworks, including:
- Porter?s Five Forces: The analysis reveals a highly competitive market with numerous established players and a constant influx of new entrants. The threat of substitutes is high, given the diverse culinary options available in New York City. However, Desi Shack?s strong brand and unique offerings could provide a competitive advantage.
- SWOT Analysis:
- Strengths: Strong brand recognition, loyal customer base, operational expertise, authentic recipes, affordable pricing.
- Weaknesses: Limited brand awareness in New York City, lack of experience in the New York market, potential for operational challenges in a new market.
- Opportunities: Growing demand for Indian cuisine, potential for online ordering and delivery, partnerships with local businesses.
- Threats: Intense competition, high operating costs in New York City, economic fluctuations.
- Financial Analysis: Desi Shack needs to carefully assess the financial viability of its expansion strategy. This includes conducting a thorough financial analysis to evaluate potential locations, capital budgeting to determine the optimal investment strategy, and risk assessment to identify potential financial hurdles.
4. Recommendations
- Hybrid Model: Desi Shack should pursue a hybrid model of physical locations and an online presence. This strategy allows for controlled expansion while leveraging the growing popularity of online food ordering and delivery services.
- Strategic Location Selection: The first physical location should be strategically chosen in a high-traffic area with a diverse population and strong potential for foot traffic. This could be a neighborhood with a growing Indian community or a location with a high concentration of office workers.
- Online Ordering and Delivery: Desi Shack should invest in a robust online ordering platform and partner with established delivery services to reach a wider customer base. This will allow them to tap into the lucrative online food market and expand their reach beyond their physical locations.
- Marketing and Branding: Desi Shack should implement a targeted marketing campaign to raise brand awareness in New York City. This could include partnerships with local influencers, targeted social media advertising, and collaborations with local businesses.
- Financial Strategy: Desi Shack should secure funding for its expansion through a combination of debt financing and equity financing. They should also implement a robust cash flow management system to ensure financial stability.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies and Consistency with Mission: The hybrid model aligns with Desi Shack?s core competencies in providing authentic Indian food and its mission to bring delicious and affordable cuisine to a wider audience.
- External Customers and Internal Clients: The strategy addresses the needs of both existing and potential customers in New York City by offering a convenient and accessible way to enjoy Desi Shack?s food.
- Competitors: The hybrid model allows Desi Shack to compete effectively with both established players and new entrants by leveraging its strengths in both physical and online channels.
- Attractiveness: The strategy is financially attractive, offering a strong return on investment (ROI) through a combination of physical locations and online presence.
6. Conclusion
By pursuing a hybrid model of expansion, Desi Shack can navigate the challenges of the New York City market while leveraging its existing strengths. This strategy will allow the company to achieve sustainable growth and solidify its position as a leading provider of authentic Indian cuisine in the Big Apple.
7. Discussion
Other alternatives not selected include:
- Solely brick-and-mortar expansion: This approach carries a higher risk due to the competitive landscape and high operating costs in New York City.
- Franchising: While franchising could accelerate expansion, it requires careful selection of franchisees and strong brand management to maintain quality standards.
Key assumptions of the recommended strategy:
- Continued demand for Indian cuisine: The strategy assumes that the demand for Indian food will continue to grow in New York City.
- Success of online ordering and delivery: The strategy relies on the continued popularity of online food ordering and delivery services.
- Effective marketing and branding: The strategy assumes that Desi Shack can successfully implement a targeted marketing campaign to raise brand awareness.
8. Next Steps
- Market Research: Conduct thorough market research to identify the best locations for physical stores and assess the potential for online ordering and delivery.
- Financial Planning: Develop a detailed financial plan, including capital budgeting, cash flow management, and debt financing options.
- Marketing Strategy Development: Create a comprehensive marketing strategy that targets the New York City market.
- Technology Implementation: Invest in a robust online ordering platform and partner with delivery services.
- Location Selection: Identify and secure the first physical location.
By taking these steps, Desi Shack can effectively implement its expansion strategy and achieve its goal of becoming a successful player in the New York City food scene.
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Case Description
Desi Shack is a "fast casual" restaurant, started by two HBS alumni, that serves Indian and Pakistani cuisine in midtown Manhattan. The founders are looking to expand into a second location and also plan to hire a COO, and there is very little room for error in the decision-making process if Desi Shack is to continue operating. This case discusses questions of location choice and hiring decisions, and provides an example of a framework entrepreneurs might use to think about the many factors that must go in to making these choices.
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