Roasted Duck Delicacies Limited
Expo 86 was a memorable event in the history of British Columbia. It also marked the beginning of young Shengli Wang's love affair with Canada. He was brought to Vancouver from his native Beijing to work as a cook in a Beijing restaurant that specialized in Beijing roasted duck, a rage with British Columbians and the hordes of visitors to the fair that summer. Shengli and his wife opened Wang's Roasted Duck, his first restaurant in Vancouver. It was an instant success. By 1988, almost every major city in British Columbia and the prairie provinces had a Wang's Roasted Duck.
Although popular, the restaurants were not profitable. The quality of management was poor, labor costs were high and the food had deteriorated largely because most of the cooks were recruited locally and did not have the expertise of a roasted duck chef. By 1990, with the exception of the Vancouver restaurant, Wang's Roasted Duck restaurants were experiencing severe losses. In 1992, Jeff Robertson acquired a controlling interest in Wang's Roasted Duck. Jeff's fascination with Chinese cuisine developed during his stay in China as a CUSO volunteer. His graduate work in business administration gave him the business and management skills to recognize a business opportunity as well as to assess realistically the challenges of making Wang's Roasted Duck succeed.
Jeff shared Shengli's vision of popularizing roasted duck delicacies but decided on a different strategy – a fast-food operation. His winning formula would be a combination of speedy service, cleanliness and quality food with the exotic Chinese flavor and taste. Recognizing the increasingly popular desire for tasty nutritious foods, Jeff saw the skinless roasted duck as the perfect answer. He changed the name to Roasted Duck Delicacies Limited (RDDL) and decided to set up licensed franchises along with company-owned outlets. Each of the existing Wang's Roasted Duck restaurants was converted into a company-owned outlet of RDDL. The RDDL outlet, company-owned or franchised, is a fairly self-contained operation with a kitchen and seating area. All the food is cooked in a specially designed oven and process which brings forth the exquisite flavor and taste of roasted duck.
Jeff was aware of the problems usually associated with fast-food operations – shortages of crew labor and competent and trustworthy store managers, high turnover of staff, need for continuous training and motivation of employees, and rising labor costs. He also recognized that critical to the success of the operation were quality products, which in turn required specialist chefs. Such chefs are not home-grown in Canada. He considered training chefs but eventually decided on hiring them directly from China.
The growth of the franchises outpaced that of company-owned outlets, but by 1995, the number of company-owned outlets had increased dramatically and is expected to eventually constitute about 40% of the total outlets by the year 2000. Quality, cleanliness, and customer service are the main ingredients that translate into sales and profitability. Operating processes and equipment have been standardized and no changes are expected in this area. Jeff is concerned, however, about some developments that might adversely affect RDDL. First, the immigration department is reluctant to grant visas to chefs from China unless RDDL can demonstrate that catering graduates from the community colleges are not suitable. Second, Riddle's corporate office and warehouse, located in Ontario, is required to comply with Ontario's pay equity laws. Third, some attempts have been made to unionize RDDL's workforce.
The success of the company-owned outlet depends to a considerable extent upon its manager, who has responsibility for operations, employee training, customer relations, and cost-effectiveness. Last year, RDDL experienced sales growth of 11 percent and expects the same this year. Cost-effectiveness particularly critical to RDDL's success in the context of its major competitors – McDonald's, Burger King, Kentucky Fried Chicken, Wendy's, and similar fast food operations. Jeff is rather ambivalent in his attitude to NAFTA. He recognizes the potential for increased competition from Mexican- American fast food outlets as well as the opportunity for RDDL to expand in the United States.
Critical Thinking Questions: Suggestions
1. Identity the external environmental challenges faced by RDDL.
A:The immigration department reluctant to grant visas to chefs from china unless RDDL can
demonstrate that the catering graduates from community colleges are not suitable.
B:The Riddles corporate office and warehouse situated in Ontario is required to comply with
Ontario's pay equity laws.
C:The attempts of unionizing RDDL's workforce
How to explain ABC?