Strategic Issues, Challenges, Solutions and Implementations Faced by Honest Burger Ltd During Covid-19 and Brexit

This report discusses the strategic issues, challenges, solutions and implementations faced by Honest Burger Ltd during Covid-19 and Brexit. It includes STEEPLE, PORTER and MCKINSEY Model analysis, TOWS Model analysis, and main challenges regarding Covid-19 and Brexit.

REPORT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Strategic Issues............................................................................................................................3
Challenges....................................................................................................................................8
Solutions....................................................................................................................................15
Implementations........................................................................................................................17
CONCLUSION..............................................................................................................................18
RECOMMENDATIONS...............................................................................................................18
REFERENCES................................................................................................................................1

INTRODUCTION
Understanding the business competitive position and identifying the sources of sustained
competitive advantage for firms is one of the biggest challenge face by UK firms during Covid-
19 outbreak and Brexit. The present report will be based on UK based great British burger
restaurant in London name “Honest Burger Ltd.”. Honest Burger Ltd have 10 year of experience
in hospitality industry (Honest Burger Ltd overview. 2021). The total number of employee work
with the honest burger ltd is 726 as per 2020 annual report. The aim of Honest Burger Ltd is to
provide high quality burger and chips to its local customers at reasonable price (Appiah and
et.al., 2021). In order to maintain the quality of burger, the company uses quality beef which
basically comes small farm in Gloucestershire. However, due to covid-19 and Brexit, the
company have faces different challenges that have further impact their restaurant operation and
financial liquidity.
Hence, the report will identify the strategic issues faced by Honest burger using STEEPLE,
PORTER and MCKINSEY Model. Further, the report will also identify the challenges faced by
restaurant using TOWS model along with the main challenges regarding Covid-19 and Brexit
using their financial statistics. Lastly, the report will suggest solutions to deal with the challenges
and its implementation along with the proper recommendation.
MAIN BODY
Strategic Issues
STEEPLE of Honest Burger Limited
STEEPLE analysis is the strategic planning tool and is used by the business when
planning strategic positioning. It stands for Social, Economic, environmental, political, legal and
ethical factors.
 Social factors: In the social sector and also with the emergence of the Covid-19 , people
are becoming more educated and conscious about their health about the food they eat in
order to stay healthy. The management of the Honest Burger should focus on changing
needs and preferences of their customers(Karpenko, and et.al., 2019). They should focus
on identifying the behaviours and changing lifestyle of the customers as well.
 Technological factors: With the increasing scope of technology, it is necessary for the
company to focus on adopting various digital marketing technologies in order to promote

their products on various social media platforms . Honest Burger also provide the online
delivery facilities for better experience of their customers. This can an advantage for the
company which can help the restaurant to expand its business in other countries.
 Environment factors:It is one of the major factor that can affect the functioning of the
restaurant. In order to successfully operate it business, it is necessary for the company to
comply with the rules and regulations and ensure health and safety of the
customer(Zhao, and Dou, 2019). After the outbreak of Covid-19 people prefer to visit and
order from the places that is hygienic and follow all the safety standards.
 Economic factors: The policies and restriction imposed by government can be a barrier
that can affect the business of the company. Taxes that is charged on food items can
affect the business as there has been increase in the prices of the ingredients and also
depend upon the spending power of people.
 Political factors:The political factors can affect the business as government is focused
towards health and safety of the customer and make frequent changes in the
regulations(Taylor, and Perkins, 2021). For overall it can be threat as it is considered as
fast food is unhealthy and can lead to various health problems but for Honest Burger it
can be an opportunity as they follow all the hygiene factors while preparing the food.
 Legal factors:Various restriction are imposed by the government regarding the control of
supply for various food products but It can an opportunity for the company as all the
products are home made which can be advantage for the company.
 Ethical factors:Honest Burgers follows positive ethical approaches which helps the
company to build its reputation and expand it business.
PORTER Five Forces Model
This is a model which helps in identifying and analysing the sector strength and
weaknesses. In order to analyse and understand the restaurant sector strength & weakness along
with the strategic issue attach with the Honest Burger limited UK, the porter five forces model
has been used:

(How Porter’s Five Forces Can Help Small Businesses Analyze the Competition. 2022)
Competition in the sector (High): Due to low switching cost and cost of product
differentiation, the level of competition in the restaurant sector is high or intense. It also put
pressure and cause issue for the company that want to sell the goods and service at low cost. As
per this force, it is analysed that high completion and high capital cost is a strategic issue for
Hotel Burger Ltd to sale its burger and chips at low price with proper cost cutting.
Threat of new entrants (High): The high capital cost associated with the restaurant
sector where new entrants need to invest high cost in innovation and quality service to meet the
local company standards. The impact of which the threat of new entrant’s force is high in
restaurant sector which is an advantage for Hotel Burger Ltd. With the help of this, Hotel Burger
ltd able to protect its customer base from the competitors (Evayani and Rido, 2019).
Bargaining power of supplier (Low): In restaurant sector, the level of competition is high
which indicate that restaurants have to maintain a cost advantage over its rival firms. This further
means that the force of bargaining power of supplier in UK restaurant sector is low which is a
strategic issue for Honest Burger Ltd that they need to cut their cost and provide the quality
product at low price as compared to its competitors in order to sustain in competitive
environment.
Bargaining power of customer (High): The bargaining power of buyer or consumer in
restaurant sector is high. It is because they have many choices or supplier of the same product. It
means this is also a strategic issue for the Honest burger restaurant which involve customer
retention and loyalty. The issue faces by Honest burger is that they need to keep their cost low,

food and beverage unique and quality high in order to retain existing consumers and attracting
new one.
Threat of Substitute product (Low): The threat of substitute product is low in the
restaurant sector because every organization have their unique method of preparing the food and
beverages (Islam and Al Amin, 2019). Thus, it is an advantage for Honest Burger ltd with the
help of which the company can gain competitive advantage in UK market. However, the issue
associated with Honest Burger is to protect their method and procedure of burger preparation
from competitors and hackers via using proper intellectual property.
MCKINSEY MODEL
This is a model which state the seven internal elements of an organisation that need to be
align together in order to successfully exist in the competitive environment. In order to identify
how well Honest Burger Ltd is positioned itself in UK market to achieve its goal, the
MCKINSEY model have been used. It is divided into hard and soft element which are as
follows:
(Analysing the organization structure based on 7s Model of MCKINSEY. 2022)
Hard Element
Strategy: This is a hard element of the MCKINSEY model which state the strategy adopt
and follow by the organization in order to maintain a competitive advantage over competitors.
For example, the closet competitors of Honest Burger ltd are Umami Burger, Wahl burger, In-N-
Out burgers etc. In order to maintain and enhance its competitive position in UK market, Honest

Burger ltd uses cost leadership strategy where they offer its high quality beef burger and chips at
low cost comparison to its customer (Wang, 2021). This also helps in attracting customers at low
cost.
Structure: Another hard element of this model is organizational structure follow by
company specifying how department and teams are structured and who will report to whom. For
example, the organizational structure follow by Honest Burger Ltd is hierarchical structure
where each employee has one supervisor who guide them how to work and they need to report
them.
Systems: This state the system used by staff within the company to complete their daily
activities and procedure as a part of their work (Shen and et.al., 2020). For example, the
technology and systems uses by staff of Honest Burger to complete their work is point of sales
system such as Light Speed Restaurant POS, Microsoft office etc. in order to track inventory,
process and analyse sales.
Soft Element
Shared Values: This state the core values of the organization along with the work ethics
of business. For example, Honest Burger is a family owned restaurant whose core value includes
teamwork, family, excellence and respect. Their aim of the Honest burger is to create a
community great people, cooperation and good relation.
Skills: This describes the actual skills and expertise of organization employees. For
example, in the year 2020, the total number of employee work with Honest Burger is 726 that
have high communication, patience skills along with expertise in unique and high quality burger
and chips cooking (Gottfried and et.al., 2018).
Style: This state the style of leadership adopted by the organization leaders and managers
in order to guide and direct the employees. For example, the manager and supervisor of Honest
Burger restaurant uses support and coach leadership style. Here, the restaurant supervisor
provides proper guidance to lower level staff and support them in order to enhance their
productivity and performance level.
Staff: This is the last element of MCKINSEY model which state the employees and their
general capabilities (Shen and et.al., 2020). For example, Honest Burger ltd have 726 total

number of employee and their capabilities are to prepare food, serve to the customer,
communicate properly to consumers, processing payment etc.
Challenges
TOWS Model
This is a matrix with the help of which the company can identify its internal strength &
weakness along with external opportunities & threats. The TOWS analysis of Honest Burger Ltd
are as follows:
Maxi-maxi strategies (SO): This state how the company uses its strength to take
advantage of their opportunities. For example, the biggest strength of Honest Burger Ltd is such
that they provide homemade rosemary chips and high quality beef burger to its customer at low
price (Gottfried and et.al., 2018). The social media presence is also one of the strength of Honest
Burger. With the help of its strength, the restaurant able to grasp the opportunity of market and
service quality development via social media platform and unique blog content creation.
Maxi-mini strategies (ST): This category of matrix state how the company take the
advantage of its strength to avoid its real threats. For example, with the help of its customer
loyalty and homemade burger which is one of the strength of Honest Burger Ltd, they avoid the
threat of aggressive competition in restaurant sector and healthy lifestyle trend after Covid-19.
Mini-maxi strategies (WO): This state how the company can use opportunities to
overcome the weakness it has. For example, the biggest weakness of Honest Burger Ltd is
limited product mix and market expansion. But with the help of opportunity of market and

product development in restaurant sector, Honest Burger have enhanced its product portfolio by
including rosemary chips, beef patties, beverages along with local burger in various areas of
London via opening new restaurants (Saidmamatov and et.al., 2021).
Mini-mini strategies (WT): This mini-mini category of TOWS matrix indicates strategies
of company that minimize weakness and avoid threat. For example, Honest Burger Ltd with the
help of its high market penetration and moderate differentiation of products, the restaurant able
to minimize its weakness of high cost of sales, low product mix and avoid threat such as
aggressive competition and enhance the healthy lifestyle of the consumer (Saidmamatov and
et.al., 2021). Their homemade food helps them to avoid the healthy food concern of consumer
during and after corona virus.
Main Challenges regarding Covid-19 and Brexit
The global pandemic has a negative as well as positive impact over the restaurants due to
lock-down restriction. The main challenges faced by Honest Burger due to Covid-19 outbreak
are as follows:
High administration cost:

(Honest Burger LTD Annual report. 2020)
On the basis of above chart regarding the administration expenses of Honest Burger Ltd,
it is identified that due to Covid-19, the administration expenses of the company has highly
increased. It is because after Covid-19 and economic recession, the inflation rate in UK was rose
by 5.5% in the year 2020. Due to high inflation rate, Honest Burger resturant has faced challenge
to carry out the daily business operation in low cost. The impact of which the administartion
expenses of the company increases (Gupta and et.al., 2018). Hence, on the basis of above chart,
it can be said that high administration cost is the main challenge faced by Honest Burger
regarding Covid-19.
Change in consumer preferences:
This is another challenge face by Honest Burger ltd after the Covid-19 outbreak. It is
because due to Covid-19, UK people are more concerned about their health and avoinding fast
food such as Burger, chips etc. This is generally done by consumer because they do not trust
restaurants such as Honest Burger regading their hygine process (Vargas-Hernández and Garcia,
2019). The impact of which the offline customer retention rate of Honest Burger restaurant has
reduced during the Covid-19. The customer are prefering more online purchase rather than
offline services after the Covid-19.
Poor liquidity position:

(Honest Burger LTD Annual report. 2020)
On the basis of above chart which is constructed from Honest Burger Financial statement,
it has been analysed that the liquidity position of restaurant has reduced during the Covid-19
outbreak. It is because in the year 2020 both current and liquidity ratio of Honest Burger ltd are
low as compared to previous years. This indicate that managing the liquidity performance of
company during the Covid-19 is a biggest challenge for the company. As, they are unable to
receive the payment from consumer on time and also due to lack of operation they unable to pay
payment to its current liabilities on time (Rawlings, Miller-Lewis and Tieman, 2022).
Reduce in debtor collection days and increase in creditors payment days

(Honest Burger LTD Annual report. 2020)
On the basis of above data and chart, it is identified that debtor collection of Honest
Burger Ltd has reduced which is one of the biggest advantage of company. But on the same side,
it is also analysing that the creditors payment days of Honest Burger ltd has increases. This
means that the restaurant is unable to provide the payment to its supplier on time. This is one of
the challenge faces by Honest Burger the impact of which the restaurant unable to purchase raw
material for burger preparation and continue its operation (Yuesti and Adnyana, 2021). This has
created a challenge of poor credit worthiness of company.
Further, Brexit is an agreement of exit of UK from EU which has also created challenge for
Honest Burger to manage its business in UK market. The challenges regarding Brexit faced by
Honest Burger Ltd are as follows:
Labour Shortage:

(The five UK sectors grappling with acute labour shortages. 2021)
On the basis of the above chart, it is identified that hotels and restaurants are the sector of
UK that have faces biggest labour shortage due to Brexit. However, this challenge is not directly
associated with Honest Burger ltd because their number of employees has increased in the year
2020 from 2019 i.e., 726 from 589. But then also, it is one of the challenge faces by sector which
have to be consider by Honest Burger ltd as well so that they can adopt proper strategy to keep
their employee happy and satisfied in order to retain them (Bermes, 2021).
Increase short-term loan and overdrafts:

(Honest Burger LTD Annual report. 2020)
On the basis of above financial statement data and its chart of Honest Burger ltd, it is
identified that after Brexit, the short-term loan and overdrafts of restaurant has drastically
increased. It is because after exist of UK from EU, Honest burger are unable to explore cheap
labour, material, infrastructure from other EU countries. Now, they need to use the same from
local market only which are very costly for them to purchase. Further, due to permanent closer of
business during Covid-19, there was little cash flow within the business. The impact of which the
company need to borrow huge fund from the local market (Ekici and Watson, 2021). This non-
availability of cheap resource and increase current liabilities are challenge for Honest Burger
Ltd.
High Tax and Tariff Quotas:

(Honest Burger LTD Annual report. 2020)
According to the financial data of Honest Burger Ltd, it is analysed that the high tax cost
and tariff quotas is one of the major challenges regarding the Brexit that is faced by Honest
burger restaurant. Previously, Honest company need not to pay tariff and tax on import of raw
material and other resources from EU (Sinko and et.al., 2021). But now after Brexit, the
restaurant need to pay tax and tariff on beef, burger and infrastructure import from EU countries
which has created a challenge of increase tax and tariff of Honest Burger Ltd.
Solutions
After summarising the above strategic issue and challenges faces by Honest Burger
restaurant of UK, the following list of solutions are available with the restaurant with the help of
which they can solve the challenges and issue:
Building strong relation with local supplier: This is the first solution in which
management of Honest Burger Ltd should build strong relation with the local supplier of
resources so that they can negotiate with them. This is one of the best way to reduce the overall
challenge of credit payment days (Restrepo and Krouse, 2021). Further, it is also important for
the company to get resources from supplier at cheap rates with the help of which they can
achieve its aim of low price burger.

Enhancing social media presence with contest and giveaways: Basically, Honest Burger
Ltd have its presence in social media platform such as Instagram, Twitter, Facebook, LinkedIn
etc. Now in order to deal with the challenge of change in consumer preferences the company
such as Honest Burger Ltd can provide and retain the customer with themselves can host
giveaways and contest on social media platform. This is best for believing the customer that
Honest Burger are more concerned about their customers.
Training and development to employee: Another strategic solution available to company
in order to deal with the challenge of labour shortage faced by restaurant sector is training and
development to employees. However, the labour shortage is not a direct associated challenge
with Honest Burger but then also it helps the company to enhance their employee productivity
and reducing their cost of sales and administration cost. This further help the restaurant to cut
their total cost via reducing wastage of resources.
Reward and recognition: The reward and recognition to employees is also one of the best
solution to deal with the challenge of labour shortage, employee retention and high cost of sales.
This is also one of the best way to enhance the brand image of the restaurant in the market so that
new talent and expertise employee can join organization with the help of which Honest Burger
Ltd can enhance its performance (Tiwasing, 2021).
Early payment discount facility to customer: The early payment discount facility to
customer will help the company to enhance the customer collection days. This facility helps the
company to deal with the poor efficiency performance challenge of the company. This helps the
restaurant to collect the payment earlier from its regular customer with the use of it the can
further pay their supplier on time.
Social media campaign regarding brand awareness: One of the challenge face by Honest
Burger Ltd is that after Covid-19, the consumer is more concerned about healthy lifestyle and
their preferences towards the health food has increased. So, in order to spread the awareness of
its brand, it is important for Honest Burger company that they should share videos regarding
hygiene and safety they maintain while cooking food. Also, they can share the post and videos
regarding that their burger is homemade and healthy which does not harm the consumer health.
This helps the company to enhance the brand awareness and deal with the challenge of consumer
preference change.

Purchase of Intellectual property: This is also one of the solution available with Honest
Burger restaurant which help the company to deal with the challenge of protecting own company
method of preparing food and beverages such as burger, chips, drinks etc. This helps the
company to protect their own restaurant from the competitors.
Focus on need to customer not competitors: This is one of the last steps or solution
available to Honest Burger where the company need to focus on their customer needs and
adoption of strategy to fulfil them rather than what competitors are doing. However, it does not
mean that Honest Burger total avoid its competitors step but they need not to put it impact over
their own restaurant operation (Sumption, 2022). The high level of competition in UK restaurant
sector indicate that the chance of growth is also high. Thus, here the restaurant such as Honest
Burger need to focus on their strength rather and opportunity rather than competitor’s
profitability.
Implementations
On the basis of identification of different list of solution with the help of which Honest
Burger can deal with their challenges and reduce strategic issues, the following implantation
technique has also required by company to implement the above solutions.
Set clear goals and define key variables: In order to implement the above mentioned
solutions, firstly Honest Burger ltd need to set the goal such as increased customer loyalty along
with defining key variables such as increases customer retention rate by 10% in next 6 months.
Other example includes decreasing creditors payment days via achieving goal of quick debtor’s
collection (Saidmamatov and et.al., 2021).
Determine role, responsibilities and relationships: Further, to implement the above
solution within Honest Burger Ltd, the restaurant need to determine the roles and responsibilities
of its workforce and communicate the same with them to implement solutions.
Delegating the work: After determining each employee role and responsibilities, the
company need to delegate the work according to employee interest and expertise in order to
implement the solution in appropriate way. For example, the marketing solution should be
implemented by marketing team and financial solution should be implemented by finance team.
Setting key performance indicator: Setting key performance indicator is also a part of
implementation plan with the help of which Honest Burger able to implement the above solution

in an appropriate manner (Gupta and et.al., 2018). For example, increasing debtor collection
days, decreasing creditor payment days, decreasing short term loan, providing training and
recognition to employee within 3 months etc. This all are key performance indicator with the
help of which Honest burger restaurant able to implement its solutions.
Take corrective action: Implementation is basically an iterative process which does not
stop until Honest Burger reached their goal. So, lastly, in case if the restaurant found that
company are unable to reduce its issue or challenge with current solution, then proper corrective
action is need to be taken.
CONCLUSION
From the above report it can be concluded that it is necessary for the company to
critically evaluate the current trends and customers needs and requirements as it help the
company to take opportunities and expand its business operations. The report summarize the
various strategies issues of Honest Burger Limited which includes STEEPLE, PORTERS and
MCKINSEY model . In addition to this , the report the sum up with the various challenges by
applying the TOWS and furthermore various problems the restaurant has faced during Covid-19
and Brexit.
RECOMMENDATIONS
On the basis of the above information regarding Honest Burger main challenges regarding
Covid-19 and Brexit, the following strategy and solutions are recommended to them. This are as
follows:
 Firstly, it is recommendable to the company that they should enhance their portfolio mix
via launching new product along with entering new market in order to enlarge their
customer base. It is because expansion helps the company to reduce its weakness of low
product mix and poor market development.
 Further, Honest Burger should provide proper training and development along with
rewards to its employees so that they can able to retain talent employee and deal with the
challenge of labour shortage after Brexit (Vargas-Hernández and Garcia, 2019).
 It is also recommendable to company that they should provide discount facility to its
consumer and build strong relation with supplier in order to deal with the challenge of

poor liquidity and efficiency performance of Honest Burger which has highly affected
after Covid-19 outbreak.
 Lastly, it is also recommendable to Honest Burger company that should purchase trade
mark and copyright for their company so that their competitors can take their ideas and
process (Rawlings, Miller-Lewis and Tieman, 2022).

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