Managing for Quality and Performance Excellence 9th Edition by James Evans,William Lindsay

Exercise 16

Gold Star Chili, Inc., based in Cincinnati, Ohio, was founded in 1965 as a family-owned system of franchised and company-owned restaurants. Gold Star operates over 100 regional locations (most of which are franchised, with a few being company restaurants or are co-owned). The Gold Star menu is based on a unique, "Cincinnati-style" chili recipe, flavored with a proprietary blend of spices from around the world. The chili is prepared in a central commissary, designed to reduce equipment needs at individual restaurants, promote consistency, and reduce labor costs. Most locations have both in-store dining and a drive-through. Gold Star operates in a highly competitive market against other multi location chili firms and traditional fast-food competitors such as McDonald's, Taco Bell, and Kentucky Fried Chicken. It trails its major competitor, Skyline, which has a larger advertising budget, in market share. Gold Star Chili is an active participant with the Cincinnati Restaurant Association and the National Restaurant Association. These connections help maintain awareness of business trends, and advances in new technology. Changing business needs are assessed by reviewing the annual reports of competing restaurants, and an annual market research study that permits benchmarking against the restaurant/convenience food industry in general.
Gold Star Chili defines two key customer groups: direct customers who use Gold Star products and services, and indirect customers with whom Gold Star has other relationships. Direct customers are divided into six customer segments, determined by product use: restaurant customers, franchisees, franchise applicants, retail customers, retail wholesalers, and mail-order customers. Indirect customers include product suppliers, service suppliers, co-packers, brokers/consultants, shareholders, and regulatory agencies.
Gold Star's mission is to create lasting relationships based upon respect, trust, and support given to customers. More than 70 percent of customers eat in a Gold Star restaurant at least once a month, and 20 to 30 percent eat at least once per week. The loyalty of the customer base permits servers and store managers to get to know customers personally and learn much about consumer needs.
Franchisees are attracted by the relatively low investment required to join the Gold Star family of restaurants, the opportunity to operate a profitable business, and to benefit from the strong brand equity built into the Gold Star name. All department heads treat franchisees as internal customers, and have signed a pledge guaranteeing to return calls within 24 hours. If a franchisee reports a problem with product quality, Gold Star often hand delivers replacement product the same day. Many franchisees build relationships through local store marketing. Many owner/managers are active in the community with sponsorships of teams or school programs. Gold Star provides owners with school achievement awards they can distribute to local schools.
Visit the company's website at www.goldstarchili.com to gain a perspective about the company, its menu, activities, and culture. Click the "About Us" link to read about the history and mission of the company. Using the information provided in the case and concepts developed in this chapter, answer the following:
What types of approaches should Gold Star consider to listen and learn from different customer segments?