Honest Burger Ltd: Strategic Analysis and Recommendations Report

This report provides a strategic analysis of Honest Burger Ltd, a UK-based restaurant chain, examining its competitive position and challenges in the face of COVID-19 and Brexit. The analysis employs STEEPLE, Porter's Five Forces, and McKinsey 7-S models to identify strategic issues, competitive forces, and organizational alignment. A TOWS matrix is used to assess internal strengths and weaknesses against external opportunities and threats. The report highlights the challenges faced by Honest Burger Ltd, including social, economic, and political factors, competition, and the impact of the pandemic and Brexit. Solutions are proposed to address these challenges, along with recommendations for implementation, aimed at enhancing the company's performance and adapting to the changing market environment.

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: