Porcini S Pronto Case Draft
Porcini’s restaurants an Italian specialty restaurant chain located in Boston Massachusetts, owns and operates 23 restaurants in the northeastern part of the United States and employs over 900 employees. The company’s challenge is to expand its restaurant chain working within its limited resources and brand recognition. Complicated with a saturating domestic restaurant market and major brands currently in the market creates a formidable challenge for Porcini’s Pronto operations.
The problem was to determine the appropriate course of action for the company to take between franchising and syndication. Considering using a SWOT at first glance the decision to analyze the different methodologies using …show more content…
“Syndication is not all roses,” the CFO piped in. “There are substantial transactional cost in these deals. Even in a private syndication you’ve got an investment banker, a gaggle of lawyers, and closing cost. I’m told that these transaction cost alone can equal 6% of the value of the property.” (See Exhibit 2 for the investment and ownership/operating relationship underlying different Pronto's growth option; and Exhibit 3 for the company’s projection of Pronto rollouts under each option.)
Conclusion and Recommendations
Porcini’s Pronto would give the Porcini’s company a new vehicle for growth in the restaurant market, as it seeks to work on establishing better brand name recognition. Considering all the options that were given: Pronto restaurants, Franchising, and Syndication:
Franchising would allow Porcini’s Pronto to expand rapidly nationally allowing the company to have the least amount of financial exposure and within the 6% rate of return that management is seeking. Although, the issue of keeping service and tastes consistent would be a greater challenge than syndication effective training and incentive programs through the HR director can augment it.
Exhibit 1 Characteristics of selected full service chains (e = Estimated)
Outlets in Average Sq. Average Average NE U.S. Footage