BEIJING SAMMIES 1

Case Analysis of

Beijing Sammies

Chamara Sandaradura

ENTR 920

Dr. Sharon Wulf

Spring 2017

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Case History

Sam Goodman started Beijing Sammies in 1997. By 2003 Beijing Sammies had 5
locations, including 4 Cafes, one kiosk. All locations serviced by a central kitchen located in the
Beijing’s Chao Yang District. The newest location opened in the Beijing’s Motorola building has
low sales after the three-month promotion period that he introduced. Customer turnout rate is has
been low. When they investigate, there were multiple orders delivered with missing items, wrong
items, and the deliveries were done hours late. Goodman is trying to implement Western service
standard within the company, and it has become a challenging task. Also, Goodman is seeking to
gain more funding to expand the business (Hisrich, Peters, & Shepherd, 2017).
Finding Employees
Goodman’s goal is to implement western standards within Sammie's locations. He is having a
difficult time finding and training employees to those standards as the Chinese culture more
believe in collectivism (Wong, 2001). In the USA it is about individualism. As the case explains
Chinese employees’ mentality is “all for us” or “all for them.” Since this is the main issue, it is
hard to push an individualism agenda to a culture which strongly believes in collectivism (Wong,
2001).
To overcome this problem, rather than looking at this matter as a bringing Western service
standard to the Sammies, Goodman should think about pushing his agenda through collectivism
approach. Goodman should hire some Western students/workers and have them in each location.
It will influence and motivate the other employees and will bring them up to the speed. Also,
selecting best performing team and individuals for their outstanding customer service, reward
them will motivate to perform better as well as bring up the service standards that Goodman
wants within the locations. Also, team culture can be established through creating a team-
oriented organization, assign serious team goals, encourage informal teams, cross-train
employees, and provide proper resources to teams (Economy, 2015).
Another way to reduce the training efforts is centralizing the delivery service. With
centralizing the delivery service will reduce the stress and the training efforts needed in other
locations. Focusing on one thing will increase the service standards as well as the productivity
within each location.
Implementing Western Service Standards
Goodman’s service quality expectations are not unrealistic because the service plays a big
part of the food business. Especially, as the goal of Sammies is to give an authentic western food
experience at a reasonable price, it should have the Western service standards. As the case
explains there have been many simple mistakes such as wrong orders have been delivered,
missing utensils and part of the orders and those are common service standards for the food
industry business.

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 BEIJING SAMMIES 3

Key Success Factors

There are several key success factors involves for Beijing Sammies. Primary success
factor is focusing on the service aspect of the business. Every Business needs an exceptional
service to retain customers and just the right food will not enough. According to a study done by
Ohio State University, 80 percent of the restaurants go out of business within five years. One of
the main reason is spotty customer service (Feloni, 2014).
Second key success factor is educating customers to order and experience Western style food.
Word of mouth is big in restaurant and food business. In China, word of mouth considers the best
way to educate customers and promote the business. With Beijing Sammies it is the way to
experience part of Western culture with reasonably priced food with your busy schedule.
Last key success factor is maintained ‘face’ within in the rich Chinese culture. Teaching its
employees service with a western mindset is important for the business as well as for the
employees. China has evolved with a rich Chine culture for many years and bringing western
aspects, and cultural experience is may not well taken and staff being part of it may lose ‘face’
within the society.
SWOT Analysis
Strengths
• With central kitchen, Sammies provides same quality food throughout the region.
• Fast and customized service provided to its commercial and non-commercial customers
with a reasonably priced food and flexible payment options
• Reward program attracts and retain customers to build business and gain revenue to the
company.
• Well established corporate clientele, such Nokia, USA Embassy, Canada Embassy, Intel
Boeing, etc.
Weaknesses
• Low customer service standards provides customers not to return the Sammies.
Deliveries had many flaws damaging the service standards.
• The high overhead cost of running the central kitchen and transportation cost.
Opportunities
• Many western expatriates and students throughout the region will be an excellent
opportunity, and the number of expatriates and students are growing every year.
• The Central kitchen can handle more capacity cater and other locations that Sammies
were planning to expand in future.
• Serving to Chinese population will be the biggest opportunity with the given people in
the major cities in China.
• Sammies are well presented within the region and doing target marketing, and offering
specials will draw customers to business.
Threats

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• With the economic boom in China, there have been an array of restaurants are opening up
in China, and all of them and existing food suppliers creates more competition to
Sammies.
• Chinese government rules and regulations can be challenging.
• Cultural belief about the western culture can challenge the expansion of the business.

Investing in Beijing Sammies

By 2002 October, Sammie's revenue increased from $593,252.00 to $788668.00. It is
33% growth rate increase for ten month period. Also, Sammies had a good average profit margin
of 69.76%. It is a great margin comparing it to the industry average of 24% (Investopedia, n.d).
Even though the revenue grew by 33%, the growth of the net profit increased by only 3%.
Comparing to the increase in revenue, it is a very little margin. Also, by 2002 still the company
was running at a loss with a net income of -$36686.08 (See calculation in Appendix 1).
As an investor point of view, I will not invest in this company. Fast food and restaurant
business in China has about 10% growth in the industry, and the growth of Sammies is much
weak comparing it to the industry standards (EU SME Center, 2015). Also, Goodman is in his
third round of financing, which shows that funds invested in the company, were not gained the
advantage and managed the funds well. Looking at the income statement for 2002, it shows the
company has a seasonality. Sales tend to grow when the weather is warm, and Goodman had not
noticed that and did not adjust to the changes. As an entrepreneur, he should have noticed them
and improve the staffing and make predictions for those months to reduce the cost.
Beijing Sammies Income Statement Summary
Year 2001 2002
$ $
Revenue 593,252.00 788,668.00
$ $
Gross Profit (Reneue - Cost of goods sold) 412,271.00 550,179.00
$ $
Total Expenses 418,408.00 524,834.00
$ $
Net Profit (Gross profit - Total Expenses) (6,137.00) 25,345.00

Growth (Net profit / Revenue) -1.03% 3.21%

Revenue Growth Rate 32.94%
Appendix 1 – Beijing Sammies income statement summary and growth calculations

Building the Business

Beijing Sammies have diversified their business, and it works to their advantage. Central
kitchen and retail locations are a great mix of things to develop the business. Also, with the
refining, the ongoing delivery business and current retail sales will bring more revenue to the

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company. Retail location in high traffic areas will create more business as well as will get free
advertising. The commercial clients can be service via their delivery system. Expanding their
high-profile commercial clients will gain more revenue and bring new customers to the business.
Also, since all the locations served through the central kitchen, maximizing serving clients will
bring more revenue to the company. To serve and get more customers, educating the customer
about Sammie's food and ordering is key. Giving more focus to the central kitchen and focusing
on cratering business through central kitchen will bring advantage to the company and revenue.
To reduce overhead costs, drivers can plan their morning routes better by analyzing fewer
traffic routes and times. If this is not done properly, the purpose of the central kitchen goes to
waste. With the use of central kitchen, increasing the capacity utilization [(Actual output/
Potential production) x 100] is more efficient than just by having more staff at each location.
Doing business in China has more potential. Simply it needs only a small portion of the one
billion people in China. Also,
Training their employees to stay consistent and provide exceptional service is another valuable
aspect. Goodman has done a great job of efficiently controlled the cost of the central kitchen as
well as increased the quality control and efficiency to stay consistent with their food quality in all
retail locations.
Sammies needs funds going forward to expand and create more net profit. Goodman had
several bad investors in the past. Having the right partner or the investor is key to the business.
The investor should be trustworthy and dependable. Investments can come from anywhere, but if
the other investor has different agenda than Goodman will create problems and slowdown the
business growth.

Additional Information Need

To build a quality business plan Monroe requires more information, such as market
intelligence. Market intelligence is critical. The company should know about the market share of
the information about the competitors and their market share and also, how they are targeting
customers and making their sales. When entering a market company should evaluate the market
potential of the area that they are targeting. The case does not provide much information about
the market and their competitors. A full analysis of the competitors needed to develop a quality
business plan. Information such as, competitors around the area, how you differentiate the
business with customers, what is growth rate in the area and market segment Sammies in, and
competition financial strength and their revenue in those locations. This information will provide
to answer questions about the business and the market.
Conclusion
Sammies should focus on identifying the competition and their strengths going forward.
They may consider focusing on the delivery option as a company tends to have low overhead
cost in the kitchen operations. It will bring company more revenue as seasonality may not affect
the business.

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Reference
Economy, P. (2015, September 26). 5 Ways to Build an Extraordinary Team Culture.
Retrieved January 30, 2017, from http://www.inc.com/peter-economy/5-ways-to-build-an-
extraordinary-team-culture.html

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 BEIJING SAMMIES 7

Feloni, R. (2014, February 25). Food Network Chef Robert Irvine Shares The Top 5
Reasons Restaurants Fail. Retrieved January 30, 2017, from
http://www.businessinsider.com/why-restaurants-fail-so-often-2014-2
Hisrich, R. D., Peters, M. P., & Shepherd, D. A. (2017). Entrepreneurship (10th ed.).
Boston: McGraw-Hill/Irwin.
Wong, E. (2001). THE CHINESE AT WORK: COLLECTIVISM OR
INDIVIDUALISM? Retrieved January 30, 2017, from
https://www.library.ln.edu.hk/eresources/etext/hkibs/hkws_0040.pdf
Fenebris.com, F. (2016). Worldwide Implied Equity Market Risk Premia. Retrieved
January 30, 2017, from http://www.market-risk-premia.com/cn.html
2015 EU SME Centre, & China-Britain Business Coucil. (2015). The Food & Beverage
Market in China (Rep. No. 1). Beijing, China: EU SME Centre.

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