Reference no: EM131283707

Bubba Gump Shrimp Co.: A US-based restaurant chain is going international

Background Originally Bubba Gump Shrimp Co. (hereafter abbreviated to Bubba Gump) started out in 1972 with the launch of Rusti Pelican Restaurants in California, USA. In 1986 Winston Groom published his novel Forrest Gump. When the film was launched in 1994, Forrest Gump (with Tom Hanks in the title role) immediately became a box office smash hit and later won six Academy Awards. In 1995 the Forrest Gump film makers, Paramount Pictures, approached Rusty Pelican Restaurants, which at the time was looking for developing a concept for a mid-market seafood restaurant.

While there was no actual restaurant in the film, the main character, Forrest Gump, ran a shrimp boat business called Bubba Gump Shrimp Co. together with his ‘best good friend' Bubba, who wore an iconic hat representing the operation. This served as the launching point for the restaurant brand. Taking on the name of Bubba Gump provided instant brand identification at the consumer level. In 1996 the restaurant company Bubba Gump Shrimp Co. (holding company) started up in San Clemente as a licensing partnership between the Forrest Gump film makers, Paramount Pictures, and Rusty Pelican.

The first restaurant opened at Cannery Row in Monterey, California. The promotional material for the opening of Bubba Gump in Cancun (Mexico) is shown above. The concept Bubba Gump's own research revealed that the name brought instant recognition and association with the movie. The research showed that there was a 94 per cent unaided awareness of Bubba Gump because of its association with the film. Forrest Gump was in the all-time top five grossing films when the concept launched, so the resulting restaurant brand had instant appeal. On the one hand, Bubba Gump learned from its market research that there was an unforced translation from the movie to a restaurant. It made sense in the consumers' minds that such a thing would exist.

On the other hand, the restaurant chain also realized that if the brand did not deliver on the quality of the product, it would not have much chance in the market. The restaurant brand connected with the film property. The theme of Bubba Gump from the film was carried through in decor and menu with items including Bubba's Far Out Dip and Run Across America Sampler, echoing scenes that took place on screen. However, to ensure that it was a brand that could stands on its own, Rusty Pelican's experience of running a seafood restaurant was crucial. The name would bring people in but it would be the restaurant experience - hot food, hot and cold food, cold, and service with a smile in pleasant, clean and interesting surroundings - that would create the brand equity in the long term. For the Paramount Picture licensing division this has been the single most successful restaurant brand to have emerged from a film property to date. The value has been based on the brand extension after the movie's initial success.

It is also worth noting that the success of the restaurants has, in turn, supported the franchise of the film Forrest Gump in the marketplace, including sales of DVDs, videos, books and numerous branded products such as the familiar ‘box of chocolates'. The restaurants are positioned in places that have a high footfall of traffic and are very visible, such as the largest shopping malls and tourist destinations in the United States, like Times Square, New York. The typical restaurant sizes vary from 6,300 to 10,000 square feet. Importance of the HR policy One of the most important success factors in a restaurant is the quality of the personnel. Bubba Gump must constantly ask itself what it can do to be a better employer.

The following are some of the current initiatives (Berta, 2005): l Employees who put in more than 30 hours a week are eligible for medical, dental and life insurance. l They receive one week of vacation after a year and two weeks after two years. l Hourly employees who become certified trainers keep their benefits even if they drop to part-time status. l There are retirement plans for salaried workers. l Managers meet every year in exotic locations for ongoing training and development programmes. l All managers have regular one-on-one meetings with their immediate supervisors to discuss development goals and management issues.

l Ongoing training and development occurs at all levels of the organization and includes such things as English or Spanish language instruction and self-paced management and leadership development courses. l Bonuses and recognition programmes also are a standard practice at Bubba Gump. l Twenty-five per cent of a manager's bonus is based on achieving personal goals, and the rest is based on a store's fiscal performance. l Each store is given a budget for ‘Employee Benefit', which is used to reward and recognize workers.

Sales and internationalization
The company currently has 35 restaurants (as of May 2008). In the United States the restaurants are company-owned, but abroad the international expansion of Bubba Gump is mainly based on franchising agreements, where Bubba Gump Shrimp Co. (USA) is the franchisor and the local restaurant owners are the franchisees. The internationalization process started in Osaka, Japan, and continued over the years.

In May 2008 Bubba Gump had nine restaurants outside the United States: three in Japan (one in Osaka and two in Tokyo); one in Indonesia (Bali); one in the Philippines (Makati City); one in China (Hong Kong); and one in Malaysia (Kuala Lumpur). In 2007 Bubba Gump secured a franchise agreement with Middle East-based Mubarak Al-Hassawi Restaurant Development Group, which plans to open 12 restaurants in key Middle East cities. The average bill (per person/per family) is $17 for lunch and $22 for dinner. In 2007 this resulted in a total turnover for Bubba Gump of over $150 million.

Questions

1. What are Bubba Gump's ‘Key Success Factors' when going international?

2. Should Bubba Gump Shrimp Co. further internationalize its concept? Why or why not?

3. Over the next five years, Bubba Gump plans to open 35 to 50 new restaurants. What should be its main criteria for selecting locations for these new restaurants?