BOSTON MARKET and McDONALDS FRANCHISING
In case 4: Boston Chicken / Boston Market of our textbook, we learn the history and lifespan of the Boston Market chicken company. Throughout its life, Boston Market has experienced many competitors, both direct and indirect. One of Boston Market’s direct competitors was, and still is KFC (Kentucky Fried Chicken). Both Boston Market and KFC specialize in fast food chicken, however, Boston Market focuses on rotisserie chicken and more of a “home-cooked” feel whereas KFC focuses on fried chicken and more “fast-food” style meals. Coincidentally, George Naddaff, owner of 19 Kentucky Fried Chicken franchises, caught on to the “home-cooked” fast food idea and purchased a Boston Market franchise. Boston Market’s direct competition at that point, wanted to participate in their concept which carried them far beyond their current sales and revenue.
Some indirect competitors of Boston Market eventually got involved as well. McDonalds ended up purchasing the chain of stores in 1998 and changed a few things to increase the appeal of Boston Market to its consumers. Fortunately for McDonalds, they are a big enough corporate themselves which enabled them to make this deal with Boston Market, whereas the other indirect competitors (local sub shops, Chinese restaurants, etc.) were not in a financial position to do so. So far, McDonalds has done a great job with the company and Boston Market stores are still functional and selling rotisserie chicken today.
Backing up a little bit, in 1997 when the stock price had plunged more than 50% in three months, the company needed to make some serious changes. Stockholders were displeased because the financials and reported profits were misleading and losses were recorded on the books of the franchises “area developers” and not in the corporation’s statements. In other words, the losses of the individual franchises were not being reflected on the corporation, overall. While the Boston Market...