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Transcript of CASE STUDY
Primarily a take-out-only concept, Little Caesars, once financially strong and growing faster than its chief rivals Pizza Hut and Domino’s had less than half the units of Pizza Hut.
The relationship between Little Caesars and Kmart is that of the standard franchisor-franchising contract. Kmart is a franchisee of the Little Caesars franchise system and thus must pay franchisee fees and royalties.
Though Kmart is one of the world’s largest mass merchandise retailers, it has sustained substantial revenue losses over the last decade.
Kmart (sometimes stylized as K-Mart) is an American chain of discount department stores headquartered in Illinois, United States.
The company was founded in 1962 and is the third largest discount store chain in the world, behind Walmart and Target
Kmart operated a total of 1,221 Kmart stores in 49 states
Little Caesars is a pizza chain, estimated to be the third largest in the United States.
Caesars headquarters is located in the Fox Theater building in Downtown Detroit, Michigan.
Little Caesars Pizza was founded by husband and wife Mike and Marian Ilitch on May 8, 1959.
Mike wanted to call it simply "Pizza Treat," but Marian wanted a name that suited him more. Marian considered Mike her "little Caesar". Mike ultimately relented, and the store opened as "Little Caesar's Pizza Treat." The original store is still open today.
I- II - III
& Little Caesar
Case: Little Caesars and Kmart
From the point of view of Little Caesar’s Management
The major problem here is the closing of Little Caesar’s and Kmart’s many stand-alone units which could put Little Caesars Franchise at stake.
To formulate ways to stabilize the expansion and revenue of the franchise.
-Re-conceptualize the franchise with co-branding partner
-Joint venture with other firms
-Improved promotional effort.
I. FROM WHAT POINT OF VIEW
II. MAJOR OPPORTUNITY OR PROBLEM
- Kmart is one of the world’s largest mass merchandise retailers, it has sustained substantial revenue losses over the last decade.
Little Caesars, once financially strong and growing had less than half the units of Pizza Hut.
- The relationship between Little Caesars and Kmart is that of the standard franchisor-franchisee contract.
- The opportunity to own and operate a fast food unit in a Kmart weren’t offered to any of the Little Caesars freestanding unit franchisee.
- Some franchisees openly expresses concern over the co-branding decision, fearing the Kmart units would cannibalize sales of existing freestanding operations.
Little Caesars announced the closing of its many stand-alone location due to a company restructuring effort.
- If Kmart moves to close stores to reduce its cash outflow, the future
of those Little Caesars expresses units could be in jeopardy.
- Upon restructuring of both firms and improved co-branding efforts.
Both firms can succeed in their business venture.
The best solution be to re-conceptualize the franchise
with its co-branding partner.
1. Did Little Caesars make a mistake when
selecting Kmart as its co-branding partner?
Why or Why not?
2. Conduct Primary and secondary research to determine the current state of this co-branding partnership. Do both firms view this
venture a success?
ANSWER TO QUESTION