In assessing the possibility of opening a new Applebee's restaurant in Toronto, Canada, and using the SWOT analytical tool, what are three strengths, weaknesses, opportunities and threats involved in such a proposal?
Applebee’s International, Inc., is a major chain with over 1,500 restaurants around the world. It does over $2 billion in business per year. When considering whether to open a restaurant in a new location, it is well-versed in the methods employed in considering the advantages and disadvantages of particular sites. Toronto is the largest city in Canada, with a population of 2.7 million people. When a major chain is considering locations for new restaurants, decisions on whether to tap a potential market of over two million people are usually pretty simple. Within a particular community, however, there is a need to conduct an analysis of whether that community provides the requisite advantages corporate officials look for when considering expanding.
As a major chain that has already expanded globally, Applebee’s strengths are clear. First, it is a family-friendly operation that also caters to the single crowd by including a full-size bar. Its menu is eclectic, yet strong in the area of basic favorites like hamburgers and pasta dishes. A second strength of Applebee’s is its size and the corporate structure that supports it. As a major chain, its marketing division supports all of its locations and reaches all television viewers. Applebee’s invests a lot in its advertising efforts, and it has developed considerable name-recognition. Finally, it is considered an economical option for middle-class families with an interior design that lifts it above other chains like Perkins and Denny’s.
Weaknesses include a corporate structure that precludes innovation, as each individual restaurant is required to adhere to a fixed system for how it operates. Another, more significant weakness is its reputation among many middle- and upper-class families as a tacky, qualitatively inferior option. The Applebees brand has detractors who view it as emblematic of the weakening of the dining experience through the proliferation of mediocre chains. A third potential weakness is it's reputation for poor service, a reflection of its attributes insofar as the more diverse a menu the less standardization available to kitchen staff.
Opportunities include the obvious possibility of increasing revenue with the operation of an additional restaurant in a major metropolitan area, the prospects of increasing its share of the lucrative Canadian market, and the increased name-recognition it would enjoy in a large city with a diverse population.
Threats include the risk of over-saturation of a market and the fear that it will become a ubiquitous presence. In other words, its very success at expanding could become a weakness if it is seen as becoming as omnipresent as McDonald’s. Another potential threat is the competition from other family chains as well as from independent restaurants, of which there are many in Toronto. As noted, Toronto is a large, established city. Opening a new restaurant there could fall victim to already established eateries in the communities in question. Finally, Applebees is an American company. Canada is the United States’ largest trading partner, and it has long been a close ally. That said, many Canadians are resentful of their larger, more powerful neighbor, and that attitude could manifest itself in hostile feelings towards an American chain. Many U.S. companies successfully operate in Canada, so this threat is minor, but Applebees could be viewed through a geopolitical prism that hurts its business.