Executive Summary: In 2004, Dan Hannah, vice-president for business development of Ruth’s Chris Steak

House, was put in charge of formulating a business strategy to ensure the continued

growth of the company, and as a franchise. Hannah believed a great way to expand the

company would be to establish restaurants over seas. The problem was that many

potential investors couldn’t qualify to buy into the franchise with the strict company

policies, so Hannah had to brainstorm other ideas for expansion.

After considering multiple models for growth, Hannah decided to go with a market

development approach to international expansion. He believed the best idea for the

company would be to offer the same products and services, but enter new markets. In

order to decide which countries to penetrate, the management team compiled data of

each country’s beef consumption, per capita GPD, and population.

The problem the management team faced was whether to expand internationally or

within the United States, finding countries that could supply USDA Prime beef, and

which countries were good candidates for expansion. The alternative solutions to these

problems were to enter into the European market (specifically Spain, France, and Italy),

and enter giant tourist destinations. By entering the tourist destinations, the country’s

DPD numbers don’t play a significant factor in the outcome of the company’s profits.

Our recommendation to Dan Hannah and Ruth’s Chris is to establish restaurants in

Spain, France, and Italy. Each city contains the attributes Ruth’s Chris is looking for in a

market.

Intro: In 2004, Dan Hannah, vice-president for business development of Ruth’s Chris Steak

House, was put in charge of formulating a business strategy to ensure the continued

growth of Ruth’s Chris as a franchise, and for company-owned restaurants. Hannah

knew that a great opportunity for the company to grow was to expand overseas,

considering they were only operating in five countries. The company had received many

inquiries from would-be franchisees all over the world, but couldn’t go through with

these deals because the franchise fees were unaffordable for many people, and strict

policies were intact that potential investors couldn’t comply with. Many senior managers

at Ruth’s Chris did not like the idea of globally expanding the company, leaving Hannah

in a tough position to fulfill his assignment.

Background:

Ruth Fertel founded Ruth’s Chris in 1976. After many attempts, a local business owner

named Tom Moran convinced Fertel to open Ruth’s Chris first franchise in 1976. By the

1980’s, the franchise grew globally, and was opening up new restaurants regularly in

cities around the nation and the world.

Ruth’s Chris became the biggest fine-dining steak house in the country. The restaurant

was recognized for its customer satisfaction, and its variety of USDA Prime grade

steaks. Ruth’s Chris had a vast menu, with the price of entrees ranging from $18-$38.

With its success in around the globe within its industry, Ruth’s Chris was successful in

completing its initial public offering raising more than $154 million in new equity capital

in 2005. In that same year, the company also hit record restaurant sales at $415.8

million from 82 locations in the United States and 10 international locations.

Case Situation:

After considering the four basic models for growth the VP of product development

determined that Ruth’s Chris should pursue a market development approach through

international expansion. The company would expand into new markets with its same

product.

The management team defined selection criteria. They determined that they would

select from seventeen countries that could be classified as beefeaters. They would only

expand into countries that had access to USDA prime beef, or its equivalent. They also

needed to choose countries with large population centers. An additional requirement

was the need for populations with substantial disposable income that were inclined to

eat out. Finally, since the company was intent on retaining its U.S centric brand, they

need to select countries that were not substantially anti-United States.

Managerial Problem:

To take decision for the Global expansion of the Ruth's Chris in the context of 1) Decision on target country for the expansion internationally and/or in US 2) Decision on whether to open Company owned or Franchisee owned restaurants 3) Decision on business development model Subject to 1) Main serve is beef 2) Use of USDA Prime beef (or alternatively Australian high standard beef can be considered if required) In consideration of following circumstances 1) Whether the population consumes beef 2) Whether the Trade conditions in favor to import US standard (USDA prime) beef 3) High population and urbanization 4) High disposable income and per capita GDP 5) Affinity of US brands and people tendency to go out for dining and quality of dining they prefer

Alternative Solutions and Evaluation of Alternatives:

The world’s markets were assessed against the key criteria. The starting point was

exhibit 4 from the case materials (Kutpetz, 2006). The top thirteen beef consuming

countries were extracted and ranked. The U.S. was included only as a reference. The

per capita GPD was also extracted and ranked for these thirteen countries. Next the

number of large metropolitan areas in each country was noted and also ranked

<www.geonames.org>. Finally, the rank was summed and averaged to give a relative

un-weighted rank of each country’s fit to the criteria. Each country was also assessed

to determine if there was a prevailing anti-U.S. attitude that may impact reception of

Ruth’s Chris U.S. centric brand. Each of the thirteen countries has a substantial

presence of Subway and Burger King Restaurants implying no significant Anti-U.S.

sentiment <www.subway.com> & <www.bk.com

Spain, France, and Italy had the best ranking and are worthy of careful considerations.

The next tier of ranks: Netherlands, Ireland, Germany, Belgium, and the Bahamas

should be assessed further for the merits and risk of the items that garnered them a

lower score. The remaining countries would carry substantial risk and would need

compelling reasons to supersede the established criteria.

An alternative solution that could warrant further study would be tourist destinations.

These would need to be assessed as independent metropolitan areas, irrespective of

country. Tourist’s disposable income may out-strip the reported national per capital

GPD to make these cities highly profitable possibilities.

Recommendation and Conclusion:

Our recommendation is to enter the European market (specifically Spain, France, and

Italy). Each of these countries rank very high in terms of their qualifications for market

penetration. Each of these countries contains attributes that make expansion into these

markets so inviting. Many other countries around the world lack one or two significant

qualities making expansion into these countries much riskier. Spain, France, and Italy

all have a high beef consumption rate, a high per capita GPD, and highly populated

cities, We believe Ruth’s Chris best option to continue to grow as a company would be

to enter these markets.

Works Cited Kutpetz, Alan, H. (2006, November). Ruth’s Chris: High Stakes of International Expansion (Exhibit 3) Ivey Management Services International Locations, (2013, September) Retrieved from http://www.bk.com/ en/us/international/index.html

Explore Our World, (2013, September) Retrieved from http://www.subway.com/subwayroot/ exploreourworld.aspx