Roy Rogers
Roy Rogers Restaurants is a fast-food franchise business owned by the Marriott Corporation. In the case, Roy Rogers was pursuing a strategy of aggressive growth through the licensing of independent franchises to operate its restaurant outlets. The Roy Rogers Restaurant system had a strategic mission that emphasized hamburger and chicken products, a family orientation, and a high price/high value perception. Competitors in the hamburger segment of the fast-food industry employed a number of strategies to prepare for the anticipated decline in hamburger demand. Most diversified their offerings with breakfast and developed new concepts such as drive-through-only units and home delivery. In addition to the anticipated decline in hamburger demand, there were several other pressures facing the industry. The first was changing demographics. Second, experts pointed out that many localities had become saturated with fast-food restaurants. Third, the cost of media advertising had risen dramatically making it difficult for smaller chains to afford this tool for increasing customer awareness. Last, because American consumers remained health conscious, they would continue to demand innovative product offerings that were both convenient and nutritious. Although the many pressures facing the industry were expected to limit opportunities for new national fast-food chains to enter the market, regional competitors like Roy Rogers were expected to enjoy some competitive advantage because of their ability to react quickly to trends, exploit relationships with local real estate developers, and develop niche strategies well-suited to geographically limited markets. The total capital investment of a new Roy Rogers franchise ranged between $976,000 and $1,374,000. With net income of a typical franchise at $49,975 per year, returns were at 3.64% to 5.12% per year on invested capital. With $49,975 of net income per year it would need roughly 20 to 28 years in order for 100% return