Marketing Plan and Feasibility Study for Wing Zone

Team Wingin It
Greg Finke wfinke@radford.edu Lindsey Johnson ljohnson3@radford.edu Elizabeth Squibb esquibb@radford.edu Brandon Turner bturner2@radford.edu Whitney Vargas wvargas@radford.edu

Table of Contents Executive Summary................................................................................................................1 Franchisor Background Information.......................................................................................2 Product/Service Description....................................................................................................3 Situation Analysis....................................................................................................................3 SWOT Analysis.......................................................................................................................5 Target Market..........................................................................................................................5 Site Location............................................................................................................................7 Marketing Strategy..................................................................................................................8 Recommendation.....................................................................................................................12 Appendix.................................................................................................................................14 References...............................................................................................................................17

Executive Summary
In just fifteen years, Wing Zone has gone from a restaurant in a fraternity kitchen to a huge, multi-state operation with nearly one hundred locations. Growth has been tremendous, and it appears to be no end in sight for expansion. This take-out restaurant is catered mostly to the college crowd, and offers a number of items such as chicken wings, hamburgers, and salads. Wing Zone offers a unique blend of up-scale menu items with the convenience of a take-out eatery. There are a number of factors that must be determined in order to decide whether or not a Wing Zone would be profitable in the New River Valley. The biggest determinate is the target market, and the company states that it likes its restaurants to be located near large colleges in order to target the students. Also, it must be determined that competition, such as Pizza Hut and Buffalo Wild Wings, will not run Wing Zone out of business. Another major factor is finding a central location in which to locate this restaurant, and this can be accomplished by studying the demographics and lifestyles of the people in the region. In order to make the restaurant a success a number of strategies must be put in place. The menu must not be too cheap, or too expensive, for the area. Both sides of that spectrum could ruin the establishment. Also, the promotion and advertising of the restaurant must be handled in a responsible manner in order to reach the maximum number of people. Advertisements in newspapers, on radio, and by means of special displays are all ways in which Wing Zone could reach its customers. The establishment must also pay close attention to the weaknesses and threats that this region will offer, and capitalize on the strengths and opportunities that it also offers. Wing Zone would be a big success in this region thanks to its unique menu items and its take-out dining style.

Franchisor Background Information

Wing Zone began as a unique alternative to late night pizza delivery in 1991. Two fraternity brothers started the business out of their Florida fraternity house kitchen; starting a business that has sprawled into 22 states. The concept of quick delivery of traditional Buffalo wings, chicken sandwiches, burgers, and chicken strips complete with a variety of 25 sauces has exploded around college campuses throughout the United States. Wing Zone has become one of the fastest growing franchises, and with good reason; the product is unique, convenient, and in high demand. With an estimate between $60,000 and $75,000 in liquid capital available it is a relatively low-cost franchise venture. The company urges franchisees to open businesses around college campuses, military bases, hospitals, and other areas in which delivery options are needed. Additionally, because this business is solely take-out and delivery only a small retail space is needed in which to operate. This allows for already developed areas to embrace the concept because there is no need to build an excessively large structure. Wing Zone makes it very easy for potential franchisees to join in the experience by providing training, lease negotiations, signage, structural specifications, and insurance. Additionally, throughout the length of ownership, the company provides the franchisee with constant support, an intranet for communication, as well as the advantage of corporate advertising. All in all, Wing Zone calculates the complete start up costs including insurance, leasing, computer systems, etc. anywhere between $179,500 and $229,500. Wing Zone provides prospective franchisees with all the support and assistance one could possibly imagine. The company has earned its spot as one of the most sought after franchisors through the exceptional level of support, as well as the opportunity for significant

financial compensation. With 87 stores either already in business or nearing completion, there is a strong base within the franchise, but also numerous untapped markets with the potential to become very successful locations for this establishment.

Product/Service Description
The fast food industry appears is growing each year, currently accounting for nearly $126 billion in sales. In the next five years those sales are expected to increase to nearly $200 billion, which is a massive increase. The low carbohydrate diet which hurt the fast food industry several years ago is a dying trend, thus representing the upswing in sales over the next five years. Sports continues to increase as a form of recreation for millions of people. Also, there has been a revival of card games in recent months thanks in part to the poker championships that are popular on television. Chicken wings have always been the popular snack food for both of these activities. A typical consumer for Wing Zone will without hesitation be a fan of chicken. Chicken consumption in the U.S. increased by almost 25% in 2004, making poultry a favorite among Americans. (Restaurant Business) Chicken is seen to be one the most cost-effective and least expensive item on most menus; which will in turn allow customers to purchase more or visit more frequently. Even though the low carbohydrate diet is going out of style, people are paying much more attention to their diets. Chicken has increased in popularity because of the low carbohydrates and fat when compared to other types of meat.

Situation Analysis
The greatest threat for competition in the New River Valley would definitely be dine-in chicken/wings restaurants that also have a bar. Their major competitive advantage is that they

offer a sit down dinning area that is very attractive to the city or town where they decide to build. Also, this potential competition offers alcohol, which is a major draw to college students. While only being a take-out establishment is a disadvantage, it is also an advantage for Wing Zone because take-out restaurants are very popular. With people living busier lives now than ever before not everyone has enough time to go to a restaurant and sit down waiting to be served, such as at Buffalo Wild Wings. After pulling a long day at work many people simply want to pick up a meal and take it home to their family. Because of this type of atmosphere Wing Zone would be able to place orders much faster than most dine-in restaurants because of the lack of a sit down crowd to cater to. The majority of the college students and locals that live in the New River Valley like to sit down with their friends and family, eat, have a few drinks, and enjoy the social atmosphere. Also, Buffalo Wild Wings allows the customers to purchase their assorted sauce flavors that go on the chicken, which is in contradiction to Wing Zone. Wing Zones more indirect competitors would be eating establishments such as Outback, Texas Roadhouse, Applebees, Hooters, and TGI Fridays. These restaurants are considered to be upscale, and they all serve chicken wings. This could conflict with Wing Zones attempt to establish itself as an upscale wing establishment. The advantage is that while those establishments sell wings they also sell a number of other items, thus not allowing those competitors to focus mostly on wings. The toughest competition the New River Valley region would be take-out establishments such as Dominos, Papa Johns, Pizza Hut, and other pizza delivery places. These would be stiff competitors because they offer a delivery service that is very appealing to the college market, and they have all entered the chicken wing market also.

One major draw back with Wing Zone is that you unable to place your carry-out or delivery order online. The larger pizza restaurants have the technology necessary to offer online ordering and have it delivered without talking to a person. This has proven very successful with pizza establishments because college students are very computer savvy, and most find it easier and more convenient to place orders over the Internet.

SWOT Analysis
Strengths: One of only a few chicken/wings-exclusive restaurants that delivers nation wide Targets only college and university towns Award winning sauces for taste Not just a chicken restaurant; offers other items such as burgers and salads

Weaknesses: Not a sit down restaurant, only carry-out and delivery Targets only college and university towns

Opportunities: Establish an agreement with local and college sporting events to set up food stands Take away market share from other delivery establishments such as pizza restaurants

Threats: - Dine-in chicken/wings restaurants - Local pizza delivery services (Papa Johns, Dominos, Pizza Hut, etc.)

Target Market
The target market profile will enable Wing Zone to zero in and reach out to those potential customers that best fit the establishment. The main market segment that would best fit Wing Zone would be college students (Wing Zone, 03). However, Wing Zone would fit well in a location that serves urban and/or suburban geographic locations, such as downtown districts, universities, military bases and/or hospitals. The high population that these locations will

provide would be a perfect match for the company and would be easy to market. The New River Valley has a wide variety people who are of different ages and income levels. However Wing Zone targets a smaller segment within those demographics. The primary ages are between 20-50 years old with an average income of $30,000 (BW3s). The highest concentration of students and/or population that fit Wing Zones criteria in the New River Valley is Blacksburg. The surrounding areas in the region are not an optimal fit because of decreased education levels and older populations (See Table 3 in Appendix). Choosing Blacksburg would enable Wing Zone to max the potential benefits of the target market because Blacksburg has one of the highest concentrations of high-income households in the region. This makes the town an ideal location for high and low end establishments (See Table 4 in Appendix). Wing Zone can fit into high or low-end centers, and matches the surrounding population of Blacksburg better than those in other area of the New River Valley. The proximity of Virginia Tech provides business opportunities with an array of conference visitors, as well as visitors to athletic and special events, to enhance business. Blacksburg has a beautiful natural setting to attract new residents and tourists, and well-established events and festivals all of which is in the target market profile of Wing Zone. The area will attract old and new visitors that will help keep local businesses alive. The area of Blacksburg is growth oriented in business and population, and this is beneficial to anyone planning to open a business in the town. Nearly 50% of the population in Blacksburg is between the ages of 20-50 years old and of the student population of the New River Valley is in this area (See Table 3 in Appendix), which are highly desirable demographics for Wing Zone.

Site Location
The area in which Wing Zone locates needs to have a minimum of 25,000 people within a five-mile radius of the establishment. Within that five-mile radius, 80 percent of the people or greater should be 20-50 years old. The target area also should have a minimum daytime/lunch population of 5,000 people within a one-mile radius of the location. The required average income is approximately $30,000 per year with households of single and family status preferable. About 20 percent or greater of the trade area should be college educated (Wing Zone). Because Wing Zone is a carryout or delivery establishment the customers are only willing to travel a short distance. Blacksburg has a "captive" commercial audience with students at the university as well as local residents patronizing the local establishments. This population has a disposable income that matches the local required salary as stated by Wing Zone. The preferred location for Wing Zone in the Blacksburg area is 109 College Avenue. This site is located in the beautiful downtown area, and is within walking distance of Virginia Tech, as well as a number of local dwellings. There are a number of established shops and businesses in the area, and there is an ATM close by. Main Street is perpendicular to College Avenue, which is intersected by a traffic light, making business on College Avenue visible to heavy traffic. This area around the site is populated year round and is located in a heavy business district. This particular location offers 1125 square feet of space, which would be ideal for a restaurant that focuses strictly on carryout. The lease payments per month would be approximately $2300 with a low overhead. Also, this location has the option to include a small waiting area where chairs and tables could be added. Wing Zone would benefit from the high density population this location has to offer. However, parking in the downtown Blacksburg

area is not abundant, or free in most cases. Also, Wing Zones competition is higher due to the surrounding food establishments. An alternative site chosen is 860 University City Blvd NW in Blacksburg. This location is 1300 square feet and would provide room for a small waiting are where chairs and tables could be added in order to offer a very limited sit down establishment. The lease payments per month would be approximately $1840 with low. This site is within walking distance of many apartment complexes and the food emporium of Virginia Tech. This spot will give the residents a refreshing change and alternative to their existing options. Parking is not a problem for this site, and the area is populated all year round. Traffic is not as busy as downtown so additional advertising would be necessary.

Marketing Strategy
Wing Zone is a national chain of restaurants that has had great success in the cities in which it has opened. Wing Zone should definitely conduct detailed marketing research in this region to see if its success can be continued. Research should be conducted on a variety of issues, one of which is whether or not the restaurant will be well received by those outside of the target market. For example, while our target market is college students, the company needs to find out how successful the restaurant would be during the summer when the student population drops off considerably. Also, research needs to be undertaken to see if the demand in the area is high enough from college students to justify building the franchise. The study needs to show how often and where college students eat wings, how much money they spend on an average visit, and what the students like about Wing Zones competition. Research also needs to be conducted to see how much people are willing to pay for the menu items that the restaurant will offer. While Wing Zone is trying to portray itself as a more

upscale fast food establishment, there is a limit to which people will pay to purchase the items we are offering. If the restaurant prices items too high people will not visit, also if prices are too low people may feel the quality of the food is compromised and may not patronize the establishment. Place is another very important consideration when undertaking marketing research. It should be determined whether people would visit the establishment more if it were located downtown or in a more residential area of the city. It should also be determined how much patrons would be willing to pay to park to pick up food, or if they would pay at all, and how far of a drive they would be willing to consider to patronize the establishment. Wing Zone is going to be a very different experience for the residents in the Blacksburg area. While there are a number of sports bars and wing restaurants in the area, Wing Zone will establish itself uniquely as a more upscale, fast, and high quality take-out restaurant. This will be accomplished through the restaurants advertising and sales promotions. Also, in order to bring patrons into the restaurant to place orders, the building should have bright colors on the outside, with a number of lights and a large sign in order to draw attention to the facility. The restaurant should also put a great deal of focus on customer service in order to stand out from the competition. This can also be accomplished through media and demonstrations, as well as mouth-to-mouth advertising. For example, Wing Zone could have servers stand out on the sidewalk in front of the building from time to time and hand out free samples of items from the menu. This should be undertaken when there are large crowds anticipated in the area, such as during rush hour, sporting events, etc. As the employees converse the passerbys will notice the friendly staff and good food and will want to give the restaurant a try. With the restaurant

serving a broad selection of food and friendly staff, this passerby will become a regular patron of the facility. The main target market for Wing Zone is definitely going to be the college crowd, and this is where the focus of the advertising and promotion should go. One of the best ways to reach this crowd is by advertising on the campus of Virginia Tech. This can be accomplished in several ways, all of which would reach thousands of students. While the cost may be high this more direct method of marketing would reach more students. One way that direct marketing could be undertaken would be to simply set up a small display on the campus, preferably somewhere near the Drill Field or other high volume foot-traffic areas. This could coincide with holding special events on campus that bring out large numbers of students, such as club fairs. Setting up a display could be very simple, such as a banner from the restaurant, a table, a number of wings, and maybe a stack of menus and/or coupons to show what else the restaurant has to offer. The largest expense in this example would actually be the cost of the wings, which would run in the hundreds of dollars depending on the bulk cost of cartons of wings. The cost of the banners would be high also, running into the hundreds of dollars, but the table, banner and other decorations could cost as little or as much as a person were willing to spend. Despite the cost, if giving away 1,000 wings would result in just 200 people becoming loyal customers then the display would pay off. Wing Zone could also go around to the apartments and place brochures on the door knobs of the individual units, and also hand out fliers on campus during busy times of the day. Brochures could be created by the company, and could be printed at Staples for $.99 per color copy, or $.10 for a black and white page (Lucas). Hundreds of fliers would have to be printed which would result in a large expense; however these fliers would be viewed by thousands of

students. By placing coupons on these fliers it would entice students to visit the restaurant. This method of advertising could be used to promote specials in the restaurant, as well as special occasions. It would be expensive and time consuming to undertake this task and that is why it should not be undertaken very often. The fliers and displays should be set up at a number of strategic times during the year, such as move-in day at Tech, just before football games, and during exam weeks. Another potentially valuable marketing tool in the New River Valley would be to advertise on the radio. The two most popular radio stations in the region for college students are 94.9, which plays country music, and K92, which plays modern music, according to Kathy Rilee who is the Director for Research and Marketing for most radio stations in this region (Rilee). While these stations do reach a vast geographic area they have a huge number of devoted listeners in the New River Valley. The best time to advertise on these stations would be during the evening drive time which runs from around 3:00-7:00 in the evening, when more students listen to these stations and avoid morning advertising due to most students being either in bed or in class. The prices are a little high, yet the reach would be huge. For example, drive time rates for K92 are around $110, and for 94.9 the are $200. Also, the average reach for both stations in the New River Valley area is nearly 1000 people every hour, with more people listening during drive time (See Table 1 in the Appendix). However, due to the high prices, radio advertisements should be limited to times when high feedback would be received, such as when Virginia Tech hosts a home football game or other major sporting event. While the main focus of our promotion would be on the Blacksburg area, advertising on the radio could possibly draw people from Christiansburg and Radford as well. If people from outlying areas are in Blacksburg for business or pleasure and they hear the advertisement on the

radio then they may want to patronize Wing Zone. Also, because there is no other Wing Zone in Virginia outside of Arlington, the curiosity factor could bring people to the restaurant from outside of the Blacksburg area. However, it should be realized that because this is a take-out establishment it would be exceptionally difficult to get people to visit from too far outside of Blacksburg. Unless there is a big game at Virginia Tech and people from outside the region visit Wing Zone to pick up a meal, visitation to the restaurant will be local, and advertising should take that into consideration. Another possible medium in which to market would be The Collegiate Times, which is the newspaper for Virginia Tech. There is tremendous potential to reach a vast number of students through taking out an ad in this paper. According to Nathan Jones, the BusinessManager for the paper, the daily circulation for Tuesday through Sunday is nearly 14,000 papers (Jones). The price for ads is relative inexpensive considering the number of students reached, with an ad taking up one-eighth of a page costing $96.25 and ads taking up one-fourth of a page costing $201.60. Special discounts could be given if Wing Zone decided to advertise on a regular basis, which would further reduce costs. The company should definitely advertise in The Collegiate Times when the restaurant opens, and should also advertise before any major sporting events. It would be advised to offer coupons and special offers in the ad in order to increase the flow of customers into Wing Zone. Because rates would add up, it is advisable not to advertise in the paper no more than twice a month, and only use the larger advertisements when large events are being held in the Blacksburg area.

Recommendation
Wing Zone has the potential to be very successful in the New River Valley. The restaurant will establish itself as a very unique dining experience, offering consumers the ability

the convenience of great chicken wings from a take-out establishment. The restaurant would best serve the area by being located in downtown Blacksburg. Wing Zone should try to convince the town to dedicate some parking near the area to 10-minute spaces that would allow customers to run in the restaurant and pick up food and not have to worry about paying for parking. There seems to be a high demand for this type of establishment in the Blacksburg area, thanks in part to its healthy economy and high quality of living. These factors are contributing to the growth of the towns population, which will help increase demand for Wing Zones product in the future. Other contributions to demand will also come from Virginia Tech, which is constantly expanding its overall student population. Also, as Tech becomes an even more popular destination for sporting events, there will be great growth in the demand for enough establishments to feed the people when they file into town. The football team at Tech alone could be the source for much of the revenue of the store, as thousands enter town for each game, and tailgating continues to grow as a popular activity before the games. Wing Zone should definitely plan to establish a franchise in the New River Valley. The demand already exists, and will continue to grow in the coming years. Careful marketing and advertising campaigns must be undertaken at strategic times of the year in order to make the restaurant a huge, well known success.

Appendix

Table 1 Advertising on Local Radio

Radio Station Cost (Mon-Fri) Cost (Weekend) 94.9 Star Country $200 = 6:00AM 7:00PM $200 = 10:00AM 3:00PM (Sat) $60 = Rest of weekend K92 FM $110 = 6:00AM 7:00PM $110 = 10:00AM 3:00PM (Sat) $55 = Rest of weekend 1,100

Listeners per 900 hour (Average) Courtesy of: Kathy Rilee

TABLE 2 CURRENT POPULATION AND PROJECTIONS 2000-2040

JURISDICTION 2000 2010 2020 2030 2040 Floyd County 13,874 14,609 15,826 17,043 18,260 Giles County 16,657 17,098 17,405 17,712 18,019 Montgomery County 83,629 83,397 87,997 92,597 97,197 Pulaski County 35,127 35,501 35,999 36,497 39,995 City of Radford 15,859 17,305 17,809 18,313 18,817 New River Valley 165,146 167,910 175,036 182,162 189,288 Virginia 7,078,515 7,737,597 8,483,149 9,228,701 9,974,253 Sources: U.S. Census Bureau, 2000. Virginia Employment Commission, 2010-2040. Courtesy of: http://www.nrvalliance.org/demographics/data04.php#pop1

TABLE 3 POPULATION BY AGE

JURISDICTION 2000 CENSUS 18 AND % POPULATION UNDER (PERCENTAGE) Floyd County Giles County Montgomery County Pulaski County City of Radford New River Valley Virginia 13,874 16,657 83,629 35,127 15,859 165,146 3,080 3,665 14,301 7,236 2,046 30,328 22.2 22.0 17.1 20.6 12.9 18.4 18-64 YEARS 8,588 10,210 62,136 22,552 12,354 115,840 %
(PERCENTAGE)

65 AND OVER 61.9 61.3 74.3 64.2 77.9 70.1 2,206 2,782 7,192 5,339 1,459 18,978

%
(PERCENTAGE)

15.9 16.7 8.6 15.2 9.2 11.5 11.2

7,078,515 1,741,315

24.6 4,544,406

64.2 792,794

Source: U.S. Bureau of the Census, 2000 Courtesy of: http://www.nrvalliance.org/demographics/data04.php#pop1

TABLE 4 KEY ECONOMIC INDICATORS

JURISDICTION PROJECTED 1995 MEDIAN 2000 MEDIAN FAMILY INCOME HOUSEHOLD INCOME

1997

DEC. 1999

1999

1997/98

PER UNEMPLOY. BANK FISCAL CAPITA INCOME RATE DEPOSITS STRESS (thousands)

Floyd County Giles County Montgomery County Pulaski County City of Radford

$37,800 43,300 45,500

$28,519 $15,575 30,059 18,383

3.60% 5.00% 1.80%

$159,438 171,871 794,439

86 69 63

30,421 17,676*

38,500 N/A

28,885

18,036

6.20% 2.30%

232,580 244,934

58 27

28,092 17,676*

New River N/A N/A N/A 3.40% 1,603,262 N/A Valley Virginia $56,900 $36,367 $26,109 2.60% ######## N/A Sources: Virginia Statistical Abstract, 1996-97 Edition: Weldon Cooper Center for Public Service, University of Virginia, Charlottesville, VA, 1996. U.S. Department of Housing and Urban Development. Estimated Labor Force Components, December 1999: Virginia Employment Commission. Taxable Sales Annual Report, 1999: Virginia Department of Taxation. First National Bank (Christiansburg) Report on the Comparative Revenue Capacity, Revenue Effort, and Fiscal Stress of Virginia's Counties and Cities 1997-98. Commission on Local Government, Commonwealth of Virginia, 2000. U.S. Department of Commerce: 1999 Bureau of Economic Analysis, Regional Accounts Data * Montgomery County and the City of Radford are combined.

Courtesy of: http://www.nrvalliance.org/demographics/data05.php#inc1

References
Business Center. VDOT Virginia Department of Transportation. 2005. 5 April 2005. Online: http://www.virginiadot.org/business/default.asp Cole, Patricia. High Restaurant Business. 15 April 2005. Franchise Info. Wing Zone. 2005. 4 April 2005. http://www.wingzone.com/corporate/franchise/index_f.html Franchise Info. Buffalo Wild Wings. 2005. 5 April 2005. http://www.buffalowildwings.com/franchise_info/index.asp Jones, Nathan. Questions about Advertising Rates. E-mail to Brandon Turner. 20 April 2005. Lynn Lucas, interviewed by Brandon Turner, Radford, Virginia, 20 April 2005. New River Valley Economic Development Authority. Online: 2 April 2005. http://www.nrvalliance.org/demographics/data05.php#inc1. Rilee, Kathy. Radio Station Information. E-mail to Brandon Turner. 13 April 2005. Wing Zone Soars with Winning Combination of Best Products, Best Practices. 24 April 2005. Online: http://www.worldfranchising.com/articles/wingzone.htm. Franchise Information. 31 March 2005. Online: http://www.wingzone.com/corporate/franchise/franchise02.html Franchise info. Wing Zone. 1 April 2005. Online: http://www.worldfranchising.com/profiles/WingZone.htm Top 100.