USP 186 Senior Research Proposal by kMd55I68

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									                                                                                      Amarpreet Sidhu


            Providing Healthy, Convenient Alternatives in the Quick Service Dining Industry



Discovering the ideal mechanism to distribute healthy food in Los Angeles County through the franchise

                          development of Which Wich Superior Sandwiches




                                          October 18, 2011




               A research proposal submitted to the Urban Studies & Planning Program

                                  University of California, San Diego




                                          Amarpreet Sidhu

                             Urban Studies and Planning/ Business Minor

                                    Senior Sequence Project 2012

                                          asidhu@ucsd.edu



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                                                                                    Amarpreet Sidhu


Abstract

                        Convenience is often the single, largest component that
               influences the choices of consumers when choosing a place to eat.
               I will research the relationship between what type of food is locally
               available and the impact on the obesity rates of residents.
               Furthermore, I will find the best means to combat obesity in the
               free market system. I believe the franchise system offers a
               mechanism for quick and sustained growth that can impact a large
               amount and variety of people as opposed to other forms of food
               delivery. Particular attention will be paid to Which Wich Superior
               Sandwiches because of the availability healthy food options and
               the real potential for future growth. I will identify and examine the
               ideal locations that will have the greatest reach and impact on the
               population of the greater Los Angeles area. My research will
               consist of conducting in- depth site analysis of potential locations,
               reviewing academic literature, researching fast food business
               models, surveying consumers (potential as well as seasoned) and
               directing interviews with individuals within the corporate structure
               of Which Wich.

key terms: food access, obesity, fast-food, retail location, restaurant franchise




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Introduction


“In addition to economic and cultural impact, the growth of the fast-food industry has had

significant implications for the health of the country. Thus, fast-food restaurants have had a

major influence on the incidence of food-borne infections, workplace injuries, and most

importantly from a cardiovascular standpoint, obesity. The epidemic of obesity affecting the U.S.

has been well documented.” (DeMaria, 2003)


       The United States, Los Angeles County in particular, is plagued with a low availability of

healthy options for dining and subsequently high rates of obesity and related adverse health

effects. I will examine the relationship between the availability of healthy quick service food

outlets in high density areas and the obesity rate of local residents.


       Obstacles to the creation of economically sustainable, healthy food delivery systems are

vast. (1)Restaurants want to minimize food cost and maximize profits; in order to do so they

choose to buy cheap food which is often unhealthy. Chains like McDonalds and Coldstone

Creamery are successful because (2) consumers choose to buy high calorie meals due to their

own preference and taste pallet. Also, the (3) convenience offered in fast food dining outweighs

the consumers preference for healthy food. (4) Other non-conventional methods of healthy food

delivery like farmers markets are not available on a consistent basis. (5) Independent restaurants

which offer healthy food options are not trusted in the contemporary brand name culture.


       Which Wich Superior Sandwich franchise can circumvent the issues with providing

healthy options to residents by employing economies of scale when buying (relatively) high

quality healthy food. I will measure the likability of the food by consumers who have already

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experienced the sandwiches. The franchises expansion strategy allows store owners to expand

while reaching the highest number of consumers. The Which Wich ordering system offers the

ultimate experience for consumers looking for a fast and easy ordering experience. It surpasses

the assembly line method employed by Chipotle and Subway. The customer fills out their

respective ordering slip and subsequently pays for their food- their only necessary contact with

employees is at the point-of-sale (the register). Streamlining their sandwich assembly system

assures that customers receive their food as soon as possible.


       These competitive advantages will allow Which Wich to surpass other apparatus for

delivering healthy food to the general populous. Through my research I will find the benefits of

having a retail franchise location that is able to deliver nutritious food while thriving as a

business. The franchise system offers a means to deliver maximum exposure of a service or

product to the general populous. Actors in the franchise system are aggressive in their actions to

expand and assure high profits.


Literature Review


Stipulations to offering healthy food


Existing research focuses on the availability of healthy food through all types of venues

(supermarkets, farmers markets, corner stores and restaurants). I must relate this research to

specifically target the quick service industry. The connection food outlets have to a certain area

will be examined through my research. The case can be made that food premises and food access

are a case for essential services. There is a need to ensure access to a range of essential services,

including a choice of healthy affordable food outlets, by maintaining the viability of local and

district centers. (Caraher et al, 2010) Caraher and company compare two different cities and the


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tendency for residents to be effected by local food options concluding that there is in fact a direct

correlation between having the types of food residents have access to and the obesity rates of

residents.


        It is the general consensus that fast food outlets are synonymous with unhealthy options

leading to obesity and other adverse health effects. “ For some Americans, healthier foods are

not perceived as the easiest to choose while less healthy foods are viewed as more convenient,

tastier, and faster to prepare.” (Burke, 2011) Burke focuses his study on the obstacles to provide

healthy food options on a systemized, large scale. The potential to decrease obesity rates while

improving the food system access and equity will only be possible via comprehensive systems-

based approaches. (Burke, 2011) I will look at how Burke’s research can be applied to the

development of the Which Wich franchise.

        Fast food consumption has no doubt become a large part of the American culture. In

order to battle obesity the notation that fast food is always unhealthy needs to be challenged.

“Creating a message that focusses on the positive, simple and realistic choices that can be made

to minimize the‘damage’ created by the consumption of a fast food meal offers consumers

guidance they may be likely to adopt and benefit from.” (Brindal et al, 2007) Brindal et al study

the fat content of the leading fast food chains in Australia and note that healthier meal options

are actually viable forms of nutrition for people who are interested in maintaining a healthy

lifestyle.


        Fraser et al look at the relationship between the distance and density, respectively, of fast

food restaurants and the rates of childhood obesity in England. While the distance of restaurants

to the child has no direct correlation to being overweight or obese. The density of fast food

chains in the areas where children live have indeed a direct correlation with their chances of

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being overweight or obese. This study points out the fact that fast food needs to offer healthy

meals because its prevalence as a meal source for all levels of society.




The franchise system


Resource scarcity theory supports the idea that franchising is a relatively inexpensive way to

expand operations, increasing revenue through franchise fees, royalties, and sales to franchisees

and substituting franchisee investment in local operations for parent company investment in local

operations. (Tzu et al, 2010) Tzu and company weigh the positives and negatives of using the

franchise system as a means to expand and therefore increase their customer base. The decision

of businesses keep retail locations corporate or franchise out locations is weighed; a tradeoff

exists for the corporation between retaining larger future profits with more direct control of units

and acquiring capital while working with franchisees who have a vested interest in their

respective locations.


       Looking at the success rates of restaurants in general will allow me to gauge the

plausibility that Which Wich has to be an economically viable option for restaurant expansion.

“One reason for early failure is that new businesses typically have limited resources that would

allow them to be flexible or adapt to changing conditions.” ( Parsa, et al 2005) As opposed to

independent restaurants, the franchise system offers the ideal approach to expanding and

maintaining outlets to serve that reach the end user. Moreover, the multi-unit franchisee system

will be examined to gauge if this form of growth would be sustained over the long term while

still offering service that the customer would be satisfied with. “We demonstrate that the more a

chain engages in multi-unit franchising (i.e., the greater the proportion of multi-unit franchisees


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it has), the faster it grows, even faster than franchise system)” (Kaufman et al, 1996) Kaufman

and Dant go on to look at the relationship between multi-unit franchisee growth and decreased

levels of service at each restaurant with the addition of a subsequent franchise location. A

tradeoff therefore exists between growing a restaurant brand relatively quickly by having one

franchisee own multiple locations and the ability of that one franchisee to adequately manage

their portfolio of stores. I intend to find the ideal number of outlets that one franchisee should

have in order to manage effectively while providing the needed capital for growth in regard to

the desire of the corporate office.

               As the world becomes more globalized brand recognition becomes an

increasingly more important factor that influences the shopping patterns of individuals. Koh et al

examine the importance of the branding for international companies in relation to the effect on

startup costs and overall profits concluding that “brand recognition and reputation are perceived

to be two important factors a company should essentially hold for its sustainable success.” (Koh

et al, 2009) Koh also discusses the fact that franchise establishments have a better chance of

success in terms of initially staying open and lower operating costs when compared to the

traditional independent or wholly corporate owned business structure.




Research Methods


       I intend to do an analysis with Geographical Information Systems to identify potential

locations where Which Wich will be able to serve the largest number of consumers; this would

benefit the largest number of individuals while also catering to the goal of the company’s


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corporate office and the franchisee. Ideally, locations which cater to a large lunch and dinner

crowd will be the focus of this study. Areas with a large amount of blue and white- collar

employment will be layered on high density residential areas. Ease of access to major

transportation networks will also be identified; locations near freeways and mass transit routes

will be given particular attention. While fast food choices do impact obesity rates, it is vital to

take into account other lifestyle choices that impact the obesity epidemic. The amount of time in

a week people spend exercising, watching television and choices like walking to work versus

riding a car are all significant factors which also effect the health and obesity of individuals.


       In order to complete academic research the keywords will be searched in the Sage

academic database, Google Scholar, Science Direct and the International Database of Social and

Behavior Sciences. It is important to point out that the vast amount of studies that relate to the

lack of food retailers that cater to people looking for health conscience food are geared towards

communities with the lowest level of income. Generally, Which Wich’s pricing model is not

setup to serve the needs of these communities. Prices are set to attract clients who are in the

lower-middle class, middle class and upper- middle class. I will be focusing on the general

growth and the ideal location for a new franchise without regard to the economic status of the

neighborhood.

        Competing business models like Subway Sandwiches and Jersey Mike’s Sub Shop will

be used as a comparative tool. In terms of the business cycle Which Wich is in its early stages

and it offers a chance for me to analyze the growth process involved with the franchise system.

Other mechanisms for delivering healthy food, like supermarkets, farmers markets and other

private restaurant concepts will be compared with the franchise system in terms of effectiveness




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in reaching the end user. I will look at the relationship between relatively healthy food

distribution locations and the effect on surrounding obesity rates.


         Interviews will be conducted with development agents (DAs) in the greater Los Angeles

area as well as with the development agent of San Diego. These development agents will allow

me to get an introspective look into the prospect of future growth plans for the brand.

Franchisees will also be interviews to understand the process for opening and running a location.

I would like to learn what the franchisors goals are for growth and expansion in the local market.

I want to gauge how many people can and will be served by the brand in the next ten to fifteen

years.


         Potential consumers will also be targeted to measure interest in the concept through

random sampling. I will note how often people in the area eat out and will ask what options they

would like to see. People who have already eaten at Which Wich food and service will be

surveyed to see how they rate the experience. Also, the I will ask how consumers like the taste of

the food compared to alternatives. As a student I will have a receive more honest feedback

compared with feedback compiled by the corporate office which has an obvious bias.


         Case selection will focus on researching the success of the existing Which Wich locations

in Los Angeles, Burbank and on two locations in San Diego (Pacific Beach and Northpark).

These locations will be examined to see why and when the franchisee decided to open. A

negative factor when researching this business model is that it is relatively new. The business is

not yet established as a national brand- success might only be derived from the restaurant being a

new and passing fad.


Conclusion


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Through my research I will attempt to prove that the introduction of healthy fast food restaurants

in the Los Angeles area will contribute to reducing obesity. This will be difficult to determine

due to cofounding variables- it will be difficult to isolate quick service restaurants as a dependent

variable to increasing the healthy living standards among people who habitat and work in Los

Angeles. However, I believe there is a correlation between the type of food options available in a

community and the obesity rates for members living in said community. Also, Which Wich will

prove to be an economically sustainable venue that will improve the lifestyles of individuals who

are able to access its food supply. Rational actors in the business arena, the corporate Which

Wich hierarchy and franchisees, will want to have the maximize their sales volume and the

amount of stores developed. This natural entrepreneurial motive will drive development of these

stores and assure the availability of healthy fast food options for the people who occupy, in the

capacity of work or residing in the location around these stores




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