Group 5

Pete Van BuskirkChristi LouisStefan MeiselRich Sarsfield

We are a local marketing agency (VLMS, Inc.) hired by Texas Roadhouse Grill to stimulate demand in the Vestal restaurant location from opening to 6pm.

EXECUTIVE SUMMARY

VLMS Inc. has been hired by the Texas Roadhouse to create an IBP that will attract customers to the Roadhouse between the hours of 4pm and 6pm. The Texas Roadhouse has not advertised in the past, yet they maintain a successful amount of business. Their location is strategic, across from SUNY Binghamton with a 16,000 student body, yet in part the location is popular and competition surrounds.

The student body is the target market. We will reach this market through three media vehicles, running over the course of two semesters: print (‘The Pipe Dream’ the campus paper), local radio (WMRV – FM 105.7), and local network television (WICZ TV). The message will involve the creation of an animated character, “Crazy the Nut,” who will entice students to participate in his contest. During the fall semester “Crazy the Nut” will show TV viewers slides of “his friends” having fun at the Roadhouse and tell students that if they take a better picture of them having fun at the Roadhouse, the photo will be on TV.

VLMS’s goal is to increase annual sales by 16% or $457,142. We will accomplish this with $6,168 in print ads, which will be either ¼ or 1/8 page, ROP, contain discount coupons, and appear in all 62 issues. $244,001 will be allocated towards television. The 12 spots will air on the FOX network which has an average rating of 4.6 for the three quarters we will advertise. Production costs for the TV ad will be $57,500. $24,081 of our budget will go towards radio. This will buy 270 ads, 45 seconds in duration, read by the DJ, and aired between 5am and 8pm.

The production of the radio spot and the print ad will be done in-house. The out-house production of the television ad will cost $57,500. VLMS is billing Texas Roadhouse on a pay-for-results program and will receive 10% of the total increase in sales from advertising. VLMS’s fee, production costs, and media expenditures bring the total budget to $377,464. The expected 16% increase in sales minus the total budget will bring $79,708 of sales in excess to the Texas Roadhouse.

VLMS believes this IBP received the best value for each ad placement and successfully created a positive consumer stir. The program was completed under budget and inadvertently will draw more than the target SUNY audience considering there are 125,000 locals in the area. In order for continued success, Texas Roadhouse must adopt a constant IBP due to the 4 year average turnover at the University or consider a year-long program.

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TABLE OF CONTENTS

INTRODUCTION……………………………………………………………...04

SITUATION ANAYLSIS………………………………………………………04Historical ContextIndustry AnalysisMarket AnalysisCompetitor Analysis

OBJECTIVES………………………………………………………………......07

STRATEGY…………………………………………………………………….07Target Customer AnalysisProduct StrategyPrice StrategyPlace StrategyPromotion StrategyThe MessageCreative Ideas

BUDGETING…………………………………………………………………...11ExpendituresAvailable Income

EXECUTION...…………………………………………………………………13

EVALUATION………………………………………………………………....14

APPENDICES…………………………………………………………………..16

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INTRODUCTION

The Texas Roadhouse Grill is a restaurant that has recently opened on the Vestal Parkway in Vestal, New York. Abiding by its founder’s motto, “Legendary food, legendary service, through legendary people” the restaurant has prospered. The Texas Roadhouse is known for the freshest steaks, outstanding ribs, and their famous hot fresh baked bread with apple butter. The restaurant’s “heapin’ helpin’s” are so big that “the tables do the tippin!” The Texas Roadhouse has not advertised in the past, yet they maintain a successful amount of business.

The Issue

Lines at dinnertime every day of the week are common, however 4 - 6pm are the Roadhouse’s weakest hours. How can the Roadhouse increase sales during those hours as well?

SITUATION ANALYSIS

Historical Context

Corporate Motto Corporate Vision Corporate Awards

Motto. The Texas Roadhouse Grill was founded by Kent Taylor on February 17, 1993 when he opened his first restaurant in Clarksville, Indiana on the premise of his vision of “Great Steaks, Killer Ribs, and Ice Cold Beer.” His simple entrepreneurship attitude reflected in his motto of “Legendary food, legendary service, through legendary people” has supported the growth of a chain that now covers 28 states with over 150 restaurant locations.

Vision/Focus. The Texas Roadhouse Grill is in the seemingly oversaturated restaurant industry, however they have successfully been able to differentiate themselves among their competition and have gained brand recognition and a lucrative market share. Customer satisfaction is their focus with an emphasis on high quality Texas food (steaks, barbeque, and homemade sides), a unique atmosphere, and a friendly serving staff. They also encourage patrons to enjoy their ‘saloon style’ bar, through specialty drinks and happy hour specials. The company vision is a restaurant that is a comfortable, down-home place where people can go for delicious food, and friendly folks.

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Awards. The Texas Roadhouse Grill has been the recipient of many awards, reviews, and commendations for their ability to produce high quality food. They were named the #1 steakhouse in America by R&I Magazine’s ‘Choice in Chains Guest Survey,’ along with numerous awards for rib cook offs, chili cook offs, and best new restaurant. The Texas Roadhouse is very proud of its rapid rise into popularity and its people’s choice awards, but their focus and vision has not and will not be changed.

Industry Analysis

Consumers are increasingly considered with health and diet. In recent history there have been brief beef and chicken scares. Texas Roadhouse is known for its commitment to the purity of its menu.

Health. The restaurant industry, as a whole, is experiencing a few changes which are driven by the consumers’ preferences. People are becoming increasingly health conscious, which has created a niche in the market to supply foods to consumers that are consistent with the most popular diets and weight loss trends. Many existing restaurants have altered their menus by adding healthy foods or changing recipes and other food stores have recreated themselves to appeal to these health conscious people.

Food scares. Some restaurants have experienced significant loses due to reoccurring however brief beef and chicken scares around the world. Diseases that are associated with the unsanitary handling of live animals, intended for human consumption, have turned many off of the idea of consuming meat, primarily beef and chicken. These scares are mostly seen outside of the United States; however some instances have involved cattle in the western states and chicken in the east. This has hurt the industry as a whole, but the Roadhouse’s commitment to the highest quality meats has created a high level of trust and comfort among their patrons.

Commitment. The Texas Roadhouse Grill has not changed or misrepresented their products in an attempt to capture as many eaters as possible. Instead, they have held steadfast to their recipe for success. Their food is of the highest quality, homemade, plentiful, and very tasty. This approach continues to attract and retain patrons and can create Roadhouse brand loyalty. Despite the Roadhouse’s commitment to their food style, much of their menu happens to coincide with the current desires of the health conscious community.

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Market Analysis

In terms of the Texas Roadhouse Grill in Binghamton, which happens to be the first in New York State, there are two important factors that are currently driving demand and growth:

Location Political Support

Location. Vestal is located in the southern tier. The surrounding area is in an economic depression. The town of Vestal, however, is quite well-off. Families there, on average, have enough income to eat out at restaurants. SUNY campus is also located in Vestal, across the street from the restaurant.

Political Support. A second local driving factor is the community’s and local government’s desire for the commercial growth of the area and their added contribution and desire for success.

Competitor Analysis

The following is a list of local competitors on Vestal Parkway within a two mile radius. They are each rated on a 1 to 5 scale based upon a small survey of college students. 5 is the rating for the most similarity in dining experience

Name of restaurant Degree of similarity of experience Outback Steakhouse 5Applebees 4TGI Fridays 4Pizzeria Uno 3Red Lobster 3Olive Garden 3Hooters 2.5Friendly’s 2Old Country Buffet 1.5China Buffet 1.5Number 5 .5IHOP .5Denny’s .5

The Outback Steakhouse is the Texas Roadhouse’s most comparable restaurant, being a steakhouse with equivalent prices. The Outback lies about half

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a mile east of the Roadhouse, a disadvantage in terms of convenience to SUNY students. Texas Roadhouse Grill also directly competes with the restaurants TGI Fridays and Applebees, which have already established themselves in the same market. Many of these restaurants have happy hours and appetizer specials that appeal to SUNY Binghamton students already.

OBJECTIVES

1. Secondary Demand StimulationTexas Roadhouse is packed from 6pm until close. Our goal is to stimulate demand from opening (at 4pm) to 6pm. These are their weakest times.

2. Market Penetration StrategyPromote brand awareness to the SUNY student population of happy hour drink specials and appetizer options.

3. 16% increase in salesThis increase is within a period of eight months, from September 2004 to May 2005.

STRATEGY

Target Customer Analysis

SUNY undergraduate (18-22 years old) SUNY graduates (22-25 years old)

The target market for the Texas Roadhouse Grill is SUNY Binghamton students, ages 18-25. There are 13,385 undergraduate students and 2,822 graduate students, a large pool of consumers with a complete turnover every four years. The Roadhouse will be targeting those ages for happy hour. It is assumed the 18-20 year olds will come for the appetizers and atmosphere while the 21-25 year olds will come for the food and also drink.

SUNY Binghamton students typically have characteristics of a disposable income for food and beverages, tendencies to eat out rather than cook, and have group dining habits. Many students avoid eating in the dining halls as often as possible. The location of the Texas Roadhouse Grill is across the street from campus and the dormitories, making it very convenient for Binghamton students to walk over on a spur of the moment idea. This is to the Roadhouse’s advantage because students without cars may see their competitors as not an option because

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it requires planning to get there. Dining hall food is not very appealing to students so they would rather eat off campus, in a nice and friendly environment, than eat in the dining hall everyday.

SUNY Binghamton students are also the most likely to drink and attend happy hour within the area. SUNY is growing in matriculation size each year. Students with a positive dining experience can recommend the restaurant through word of mouth to each incoming generation. This would be a free and credible advertising help for the restaurant.

Product Strategy

Meat Food Items Drinks

Meat. Through the entrance of the Texas Roadhouse there is a display of Grade-A hand-cut meats to the right. Customers can choose their exact piece of meat and get a sense of a butcher’s freshness. Americans are currently health crazy, especially surrounding beef. The recent Mad Cow health scares in Canada are in the front of many customers’ minds. This display may ease their minds as they can see how great the meat looks.

Food Items. The Texas Roadhouse has a variety of entrees and appetizers on their menu. The nine appetizers are listed clearly on the first page. There is also the Combo Appetizer for those who cannot decide on one dish.

Drinks. There is a wide selection of alcoholic beverages. Most margaritas are listed on the drink menu as well as the selection of beer, wine, and other mixed drinks. There is a full bar.

Price Strategy

Texas Roadhouse Grill‘s menu is competitively priced. Since college students are universally known for their frugal spending on food, the Roadhouse has kept prices reasonable. An average appetizer price is $6 while a margarita is $7.

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Place Strategy

The Texas Roadhouse Grill is located on Vestal Parkway, directly across the street from SUNY Binghamton’s campus. This is a prime location and the principal advantage over the other restaurants. Students that live on campus are within walking distance from the restaurant and students that live off campus are just a short drive away. The restaurant is also next to the exit off of Rte 201, making it favorable for off campus students driving from the circle. This location is also ideal in Binghamton because it is in the fastest growing section of town with a high level of visibility to the thousands of people that pass by everyday.

Promotion Strategy

Incentive program including coupons and discounts Happy Hour from 4pm to 6pm Photo contest

Coupons. The coupons will be located in our Pipe Dream ads (see Appendix 13). The discounts from the coupons will draw students to try the Roadhouse over their competitors.

Contest. The advertising campaign will be centered on “roundin’ up” the target audience to the restaurant. Texas Roadhouse will run a local contest during the fall 2004 SUNY semester. This contest will encourage students to send in pictures of themselves at the Roadhouse during happy hour. Pictures must include drinks, food, and an obvious view of the restaurant. Texas Roadhouse managers will pick the best photos during the January lull in advertising. Those winning photos will be placed in the advertisements during SUNY’s spring semester. This contest will get the target audience involved and excited. It will create a stir, not only of the Roadhouse’s happy hour but of the actual ads themselves. The contrived photo ads are funny and identifiable. They will be pictures of models within the age of the target customers and in common situations at the restaurant, for example: drinking, laughing, and yelling. Once the ads incorporating the contest winners are created, VLMS expects these ads to be sought after and saved by the target customers. The contest exact details will be posted online at the Texas Roadhouse’s corporate website. It will be specifically posted at the Vestal Parkway’s affiliate website under “Locations”. This will increase traffic to the corporate website significantly as well.

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The Message:

“What’s New?.....” and “If you miss this, you’d be nuts!”

The ads will highlight the new happy hour specials: varieties of margaritas, beers on tap, free peanuts, bread and apple butter, and new appetizers. We are going to stress the slogan “What’s New?….. If you miss this, you’d be nuts!” This message is based around that the Texas Roadhouse is fairly new to the Binghamton area and it will also incorporate the fact that the Roadhouse offers free peanuts around the clock. The slogan is catchy and helps customers remember the free peanuts.

Creative Ideas

Television Ad: This is a 60 second ad narrated by Crazy the Nut, VLMS’s original character in his usual southern droll. This character was created to be cute and funny, made from a peanut. He is a subtle reminder of the free peanuts served at every restaurant. It will be a slide show of the character showing the viewer his “favorite place” to eat with “his friends”. The commercial will feature models posing for the camera as if they were customers. After the contest ends, these contrived pictures will be replaced with the winners. Willie Nelson is also included in the ads, as he is currently associated with Texas Roadhouse. His country song, Whiskey River, will play in the background softly to give the commercial a southern, country feel. The commercial’s goal is to have a funny and familiar feeling throughout. This is a slice-of-life ad. The consumers are supposed to feel connected to the models in the pictures, remembering when they or a friend were in a similar situation at happy hour, laughing or toasting for example. The storyboard and dialogue for the television commercial are Appendices 1-4.

Print Ad: These ads are created to compliment to the television ads. The same ideas apply. Crazy the Nut is featured with pictures of people at happy hour. Coupons are featured at the bottom to pull customers into the Roadhouse over their competitors. These are feel-good type of ads. The ad will be in black and white and so no color premium applies. See Appendix 5.

Radio Ad: 45 second ad emphasizing happy hour, the Roadhouse location, and the contest. A script will be read by the DJ of the station. Texas Roadhouse will sponsor the radio program. See Appendix 6 for the DJ Script.

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BUDGETING

Expenditures

The charts contain the price of a single ad in each media vehicle. The actual total cost of the advertising campaign is in the EXECUTION section.

Local Print Ad (Pipe Dream)

The following chart shows the costs of a single black and white, ROP ad in the Pipe Dream. The circulation of the campus newspaper is 10,000.

Chart 1Ad size Cost CPM¼ page $121 $12.10

1/8 page $60 $6.00*See Appendix 7

Local Network Television Ad (WICZ TV)

The following chart shows the costs of a single 60 second ad on channel Fox 40.

Chart 2Quarter CPRP RP Total

4th $4,674 4.6 $21,500.40

1st $3,787 4.7 $17,798.90

2nd $4,867 4.5 $21,901.50*See Appendix 8

Local Radio Ad (WMRV – FM 105.7)

The following chart shows the costs of a single 45 second ad on Star 105.7 between 5am-8pm.

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Chart 3Quarter CPAQH* AQH* Total

3rd $39 1.6 $62.404th $50 1.9 $951st $39.50 2.1 $82.952nd $54 1.8 $97.20

*statistics approximated based on current data on Appendices 8-11

Available Income

Available Break-Even Advertising Budget = $457,142

The corporate annual sales were $400 million in 2003 for 140 stores.1 Therefore, VLMS assumed each store on average made $2,857,142. Our goal to increase sales by 16% would calculate to $457,142. This is our available break-even advertising budget. VLMS judges any expenditure under this amount as fair.

Production Costs and Fees

VLMS Fees = $45,714 Production Costs = $57,500 Total = $103,214

VLMS Fees. VLMS is billing Texas Roadhouse on a pay-for-results program. We will receive 10% of the total increase in sales from advertising. Our goal is 16%, and assuming this is achieved, VLMS will receive $45,714.

Ad Production. The radio and print ads were created in-house by VLMS and are included in our fees. The production of these ads are also included. VLMS’s creative team created the storyboard and invented Crazy the Nut. This is also part of VLMS’s fee. The production of the television ad costs $57,500.

EXECUTION

1 Goetz, David. Texas Roadhouse gets top ranking. The Courier Journal. May, 21, 2003.

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Pipe Dream = $6,168 WICZ-TV = $244,001 WMRV – FM 105.7 = $24,081 Media Expenditure Total = $274,250 - See Appendix 12. Advertising Campaign Total = $377,464

Local Print Strategy (Pipe Dream)

VLMS will place 40 quarter-page and 22 eighth-page advertisements in the Pipe Dream during fall and spring SUNY semesters at a total cost of $6,168. See Chart 1 in BUDGETING for cost per single ad.

Ad size Cost Frequency* Total Cost¼ page $121 40 $4,848

1/8 page $60 22 $1,320Total $6,168

*Average 2 editions per week, 31 weeks of advertising

Local Network Television Strategy (WICZ TV)

VLMS will place ads 12 ads in the 4th, 1st, and 2nd quarters on local channel Fox 40 at a total cost of $43,803. See Chart 2 in BUDGETING for cost per single ad.

Quarter Frequency Ad Cost Total Costs4th 6 $21,500.40 $129,002.401st 4 $17,798.90 $71,195.60

2nd 2 $21,901.50 $43,803

Total TV Cost = $244,001

Local Radio Strategy (WMRV – FM 105.7)

VLMS will place ads 270 ads on local radio station Star 105.7 at a total cost of $24,081.

See Chart 3 in BUDGETING for cost per single ad.Quarter Frequency Ad Cost Total Costs

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3rd 30 $62.40 $1,8724th 120 $95 $11,4001st 60 $82.95 $4,9772nd 60 $97.20 $5,832

Total Radio Cost = $24,081

Total Expenditure. A visual including frequencies of each media vehicle is displayed in Appendix 13. The total media expenditure for Texas Roadhouse for 2004-2005 is $274,250. Assuming an achievement of our goal of a 16% increase in sales at $457,142, this cost is more than fair. The total cost for the ad campaign is equal to VLMS fees, production costs, plus media expenditures. This is $377,464.

EVALUATION

IBP will create a positive stir of enthusiasm. VLMS got the best media placement value. The IBP stayed well under the break-even income. IBP inadvertently address more than target audience. There are several considerations for the future.

Positive air. VLMS believes all goals will be achieved and so the campaign is a success. The ad campaign will create a stir of enthusiasm for the Texas Roadhouse within our target audience. This stir will enhance word of mouth advertising and strengthen brand recall.

Best value. VLMS negotiated and shopped around for the best value for each local ad placement. We received a fair CPM, CPRP, and CPAQH.

Under budget. As stated before, the available break-even income for Texas Roadhouse is $457,172 considering a 16% increase in sales. The total cost of this IBP is $377,464 resulting in sales of $79,708 in excess of the cost. This is a financial achievement.

Larger audience. It is probable that the campaign will be able to draw in more than the target audience. There are 125,000 people in Binghamton and Vestal, many of whom frequent happy hours and are interested in new good food. These people most definitely saw an ad on Fox 40 or heard it on the Star 105.7. This inadvertent gain is also important to the IBP.

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Future considerations. VLMS believes the Texas Roadhouse must be ready for a constant IBP. In four years, the entire targeted students population will have graduated, being replaced by a completely new and virgin market. In order to keep the student of population of Binghamton aware and excited about the Texas Roadhouse, a continuous program of some kind must be considered. Targeting the local youth may also be a prosperous option. In January and through the summer months, the SUNY students return to their permanent homes and local youths return here. This market should not be overlooked. A yearlong campaign may be beneficial to target all 18-25 year olds as well. The Texas Roadhouse is not a seasonal restaurant and neither should their advertising be. A constant advertising program can be an essential strategy to target both SUNY and local audiences.

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APPENDICES

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