Boston Chicken Case
1. - Assess Boston Chicken’s business strategy. What are its critical success factors and risks?
Boston Chicken’s business strategy comes from a different franchising structure in which BC, instead of selling store franchises to multiple franchisees, sells franchises to 22 regional area developers across the 60 largest U.S. metropolitan markets. This 22 are developers are committed to open 50 - 100 other stores. Therefore, its strategy is focused in rapid growth and reaching economies of scale.
The critical success factors come from how efficient Boston Chicken can be at finding key locations to expand and develop their brand name. In addition, their improvements in communication is a key factor for success since
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On the other hand, the company does not count with an allowance for the receivables. This allowance will reduce their net income at the point that would reflect a bigger loss from the investor’s view. After reviewing these points above, it is evident that the accounting policies applied by Boston Chicken do not reflect the risks and their real performance.
3. – What adjustments, if any, would you make to the firm’s accounting policies?
Due to the fact that Boston Chicken is financing the operations of their franchisees (they appear to be Variable Interest Entities under the FASB 46), it is convenient to them to consolidate their financial statements in order to reflect the performance of the franchisees.
In addition, I would implement an allowance method for uncollectable accounts. By doing this, it is more certain that Boston Chicken’s reflect some of the risk they are taking.
4. – What questions would you ask management about the company’s performance?
The information given by the managers is vague because they don’t show detailed store information. I would ask managers to show:
• Detailed information about store performance: This will include numbers by store that will show individual performance.
• Real Company-Operational Information: this excludes royalty revenues and other issues that hide the real operational performance of the company.
• A complete detail of payments made to the loans by the
The company of restaurants started in 1946 when Truett Cathy opened his first restaurant in Georgia. They are credited with inventing the Chick-Fil-A’s boneless breast of chicken sandwich. In the 1960’s, he pioneered the opening of the restaurant in different malls in Atlanta. It has grown to become the largest quick service chicken restaurant chain in the United States based on their domestic annual sales and with over 1900 branches countrywide. The restaurant is privately held and family owned and has been progressing in the delivery of exclusive services to all their customers. The mission of the restaurant is to give identity and value to their clients and the vision is to be America’s best service quick restaurant.
Boston Chicken implemented a franchising strategy that differed from most other franchising companies at the time. Boston Chicken focused its expansion through franchising the company through large regional developers rather than selling store franchises to a large number of small franchisees. In that, an established network of 22 regional franchises that targeted their operations in the 60 largest U.S. metropolitan markets and in order to do so, the franchisee would have been an independent experienced businessman with vast financial resources and would be responsible for opening 50 – 100 stored in the region. Boston Chicken focused on widespread
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Chick-fil-A is one of the most successful fast food restaurant establishments in the country. With over 1,300 locations in 37 states in the Southern U.S., they continue to grow the brand by expanding to new territories (Chick-fil-A Company, 2009, para 1). In 2008 Chick-fil-A has seen a 12.17 percent sales increase over the chain’s 2007 performance and a same store sale increase of 4.59 percent (Chick-fil-A Company, 2009, para1). Throughout the years Chick-fil-A has come up with many innovative ideas to continue expanding business and satisfying their loyal customers. One of the ideas was to offer different types of restaurant set-ups to cater to customer’s needs. The different restaurant set-ups include mall/in
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Chick-fil-A is affected by numerous external forces which challenge upper management’s ability to make Chick-fil-A "America’s best quick-service restaurant". Through intense strategic planning, based upon the vision, mission and corporate values, Chick-fil-A has been able to establish a unique position in a very competitive industry. The corporate purpose of Chick-fil-A, "To glorify God by being a faithful steward of all that is entrusted to us and to have a positive influence on all who come into contact witch Chick-fil-A", their commitment to family and the community, and their sound business decisions, have made Chick-fil-A one of the most profitable and fastest growing quick-service restaurants
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