TROPICAL HUT CORPORATE SOCIAL

RESPONSIBILITY CASE STUDY

Karl Jhollo Redondo

12-H
INTRODUCTION
Tropical Hut was founded by the Que family in 1962. Their business started as a coffee shop
located inside various supermarkets. Through its success, the name Tropical Hut Hamburger was
created. The restaurant offers a wide variety of food options such as spaghetti, fried chicken,
breakfast meals, salads, and sandwiches. However, it is well known for its specialty - hamburgers
and fries (Wendill, n.d.).

The business various services such as a 24-hour delivery hotline, store pick-up and drive-thru,
discounts for bulk orders, birthday parties, and senior citizen discounts. Their company tagline
"Sarap na Babalik-balikan!" and their hamburger tagline "It's big. It's hot. It's fresh." have been
their original tagline for four decades already (Bartleby, n.d.).

Tropical Hut started to live with their mission, “the pursuit of excellence in providing the general
public with superior quality products at competitive/ reasonable prices as well as prompt,
convenient, courteous, friendly and effective service. This is our commitment to God Almighty,
our fellowmen, family and country. “

Tropical Hut is known as the most preferred hamburger option in the Philippines back in the
1970's. However, the rise of international and local competitors in the 1980's such as Pizza Hut,
Jollibee, McDonalds, and Burger King made Tropical Hut have a harder time in maintaining their
reputation in the industry. They experienced a huge downfall throughout the business since they
were not able to adapt to the current conditions of the market.

Table 1.
Tropical Hut Financial Ratios 2010-2011
2010 2011
Working Capital Php -48.9 Million Php -61.6 Million
Debt-to-Equity 129%
Times-Interest-Earned -19.36
Source: http://www.studymode.com/essays/Tropical-Hut-1622736.html

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In 2010 and 2011, their working capital suffered, amounting to Php -48.9 million and Php -61.6
million respectively. This means that their liabilities and obligations for these years are higher
than their current assets. This will indicate low company liquidity and capability to settle due
obligations on time.

Tropical Hut averaged a 129% Debt-to-Equity ratio which indicates that for every peso owned by
the company's shareholders, it owned Php 1.29 to its creditors. This high ratio shows that Tropical
Hut is experiencing a hard time to liquidate cash and settle their current obligations. The
company's Times-Interest-Earned ratio also amounted to -19.36 in 2010-2011 which shows that
they have been experiencing many years of net losses. Thus, they are experiencing difficulties in
settling annual interest costs (www.studymode.com, n.d.). Tropical Hut currently has 48
branches nationwide. 35 of which are located in Metro Manila and most branches are not located
inside malls (See Appendix A-B). Its website and hotline also hasn't been updated since 2013
which indicates low business maintenance. There are also no established corporate social
responsibilities in Tropical Hut which is why this paper aims to properly analyze the current
condition of Tropical Hut and propose philanthropic ways to help improve the business' identity
and financial capabilities.

STAKEHOLDERS
Bartleby (n.d.), through a case study, found out the primary target market of Tropical Hut - people
who buy food individually, as a group, or for take-out purposes. Specifically, majority of these are
long loyal customers of Tropical Hut which can be identified as elderly people. Below are brief
descriptions of the identified primary target markets of Tropical Hut and their brand personas.

Individuals are Filipinos who dine-in the restaurants by themselves. Primarily, these are the
people who are employed who finds less effort when eating in a fast-food restaurant due to time
constraints. These individuals usually don't stay long inside the restaurants since they just stop
by for a short coffee break. Solo meals are the most preferred category of these people whenever
they eat inside Tropical Hut. They also tend to read more print ads and newspapers while eating.

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 "John is a 41-year old call center agent who works on night shifts in his company.
He is only given 20 minutes for their break so he usually prefers having a short
snack, meal or coffee in order to have energy to complete the whole working hours
of the night. He prefers eating alone because of the time constraint and he is
conscious of the prices of the products he buy since he is not given a high salary on
his work. He prefers restaurants that are located just around the corner and not
inside malls. He possess the attitude of Filipinos of being hospitable and helpful
since he prefers products that will benefit both him and other people."

Groups of people are those families or friends that dine inside the restaurant together. These
people usually prefer bundled meals in order to save money. They usually spend more time inside
since they have a lot of conversations in the restaurant. These people are price conscious as they
prefer the lowest possible price possible with high food quantity. These people often look at
commercials or advertisements to become updated on the latest promotions offered by
restaurants.
"The Henry family often goes out during weekends. They usually eat lunch together
in order to have a short catch up on their lives in the family. Since they are a lot in
the family, they prefer bundled meals that are environment friendly in restaurants
in order to save money for their future expenditures. They often look on
commercials or social media advertisements to check on the latest promotions that
are offered in the industry."

Lastly, Tropical Hut targets people who opt for take-out options. These are the ones who prefer
to eat in another place instead of inside the restaurant. This may be because they are in a hurry
or they just look for the business' food and not the facilities. These people often look for fast
service when giving their foods since they will not eat inside the store. They use more packaging
products such as containers, bags, and cups since they always eat the restaurant's products
outside the store itself.

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 "Cairo is a 23-year old teacher who is always in a hurry. He usually leaves the house
right away and chooses to eat inside the school. He prefers going to restaurants for
drive-thru or take-out purposes since he has no time to stay inside the restaurant to
eat. He prefers food that are easy to eat such as burgers and sandwiches since it is
faster to consume. He is aware of the rise of paper products to substitute plastic
packaging on the food that he buys. He is sensitive of the price of the food and he
finds for meals that are of high value and low price through looking at advertisements
from social media or radio."
Other stakeholders of Tropical Hut include the employees of the business itself since they are the
ones that maintain the quality of the products and services. These are the people that should be
taken into consideration since they should be treated well in order for their work ethic and
performance to improve.

CSR STRATEGY
Tropical Hut doesn't have any established corporate social responsibility. Thus, we want to let
Tropical Hut's target market to know that the business is more than just offering quality products
and services. We want them to know that Tropical Hut also cares about the people and the
society. The philanthropic initiatives that will be proposed aims to help and promote both the
society and the brand image of the business. These are proposed to happen starting 2019.

1. Helping Hand Campaign: Partnership with Philippine Red Cross and UNICEF
Tropical Hut's website and hotline hasn't been updates since 2013 which customers may
imply lack of maintenance and development of the business. Competitors such as McDonalds
and Jollibee have very established websites with an independent online delivery system.
Currently, Tropical Hut is part of the TwoAnyOne delivery website. However, there is an
expected delivery time of one to two hours which is way longer than what competitors offer.
Various complaints on social media sites have been observed where majority if these
complaints involve slow delivery time and service.

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We propose that at the beginning of the year or the first quarter, Tropical Hut should have a
website refresh where they will specifically feature all details about the business such as its
mission and vision, corporate social responsibilities, and stockholders which will also include
an independent online deliver service.

The refresh of the website will mean more customers attracted and higher site traffic. This
will give an additional website server and domain profit due to the website created. However,
we propose that the refreshed website is partnered by the Philippine Red Cross and UNICEF
where a large part of the income made by the site traffic to its servers and domains will be
donated to these organization in order to help their beneficiaries.

Customers of Tropical Hut will be able to fully explore the updated website that has an
independent delivery site where they can place their order. This will give the target market a
more convenient time in ordering a certain product. At the end of the online order purchase,
there will be a short message or advertisement from UNICEF or Philippine Red Cross saying
thank you to the customer for helping their certain beneficiary. This will not only help Tropical
Hut have an established website, but it will also make customers be involved in helping the
marginalized sector of the country.

This initiative will open the floor to another potential target market which are the people who
opt to stay at home and order their food online since they find it hassle to go to the store to
buy food for take-out purposes. This will also help change the behavior of the third target
market of Tropical Hut since they may choose to go for online delivery than going to the store
just to order food for takeout.

Since the website needs to be maintained, there will be additional workers needed for the
development and maintenance of the website. However, this will still be feasible as it is
projected that the income will rise due to more site traffic and more customer orders.

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2. Environmental and Hunger Awareness Campaign: Partnership with WWF Philippines
The World Wide Fund (WWF) aims to eradicate national hunger. They have identified food
wastage as the primary reason why there are 13.5 million people experiencing less than 3
meals a day. They propose that by finding partners from food suppliers, restaurants or food
services, they can help lessen hunger in the Philippines. This led to their creation of The
Sustainable Diner Project.

Partnering through WWF in this project will be beneficial to the environment, the business,
and the customers. WWF will integrate their food consumption and production principles to
the business that will not only help Tropical Hut serve the right amount of food, but it will
also help consumers be aware of the current conditions of the country. This will give
customers knowledge on proper food consumption which will help them become responsible
citizens of the country.

To be able to become more engage to the customers, Tropical Hut will replace all plastic
products with environment-friendly paper products such as paper bags, cups, and containers.
On each paper bag, cup, or container, there will be a short message on proper food
consumption and wastage avoidance.

This campaign will help spread awareness among the customers as they will be the ones who
will be responsible in the country and environment's improvement. The target market shows
that people who buy for take-out purposes usually uses these products. Thus, changing from
plastic to paper will definitely let the target market see that Tropical Hut does something in
order to help the world and make them aware of the current situation of it.

Replacing the supplies of Tropical Hut from plastic to paper will incur a short increase in cost
since it is a little more expensive to use paper products such as paper bags. However, this
cost will not be affecting the business drastically. Also, moving to paper products will also
help go along with macro environment standards and competitors (Meadows, 2008).

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The campaign planning will happen at the first quarter of the year and the implementation of it
will take place starting the second quarter of the year. This is to make sure that proper knowledge
and research has been done on the campaign in order to be properly aware of the campaign.
Also, the World Environment Day will take place also during the second quarter of the year, June
5. This will not have a huge increase to the financial performance of Tropical hut, but it will be
able to raise awareness to the people and help the environment which is the social responsibility
of almost all competitors of Tropical Hut.

3. "Tropical Hut: Joy to the Unemployed" Campaign

The Philippine Statistics Authority (PSA) posted a nearly 4.1 million unemployed people in the
Philippines. This people involved those people who have low educational attainments and
certain disabilities. The Joy to the Unemployed campaign aims to employ workers who find a
hard time applying for other jobs to Tropical Hut. We observed the environment of a Tropical
Hut branch and found that there are only a few servers inside the store which caused to long
waits and poor service. Posts on Twitter also shows negative posts from previous customers
of Tropical Hut.

This campaign will help add up the number of workers inside the store and at the same time,
it will give a chance and hope for people who are socially unaccepted for works such as those
who have certain diseases (given an extent where it is still feasible for them to work) and
those who have achieved less in academics. These people are mostly seen in rural areas of
the country where some Tropical Hut branches are located. A small job fair will allow people
to know this campaign and apply for job vacancies in Tropical Hut.

This initiative aims to be implemented during the third quarter of the year since it will be best
to hire new employees once the other new initiatives have been implemented and are stable.
The campaign will help the target market receive faster food service since there will be more
workers inside a store which is a problem we've seen in our ocular of a branch of Tropical
Hut. It may also help show the customers that a business like Tropical Hut does something to

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 help the people in need. Thus, it may end up with having more loyal and satisfied customers.
This campaign will serve both the target markets and the other stakeholder of Tropical Hut
which is the workers of the company.

Since there will be additional workers, a little increase in salary expense will be needed to
suffice the salaries and wages of the added workers. This may be an increase in the total
expenses, but through this campaign, Tropical Hut can get more loyal customers in the
business. Thus, increasing the chance for the business to build a better brand image, store
services, and reputation while also increasing chances for profit gain at the end of the year.

4. "Buy One. Share One." Campaign

Through this, customers of Tropical Hut will be able to indirectly engage with the beneficiaries
of the campaign which are dependent on the periodic occasion of the year. This campaign
will be effective at the last quarter of the year since these months involve the holidays such
as Christmas, the season of giving. It will boost the morale of each customer as they will feel
that they were able to help a certain person through the food that they purchased.

Partnering with DSWD will be helpful in the development of the campaign since it will be
faster to give out the goods that Tropical Hut will collect from the total purchases of all
customers. This campaign will be possible through allocating a portion of the income per
quantity of each product to the funds needed to be able to donate the food to the said
beneficiary.

This will appeal to the target market since it will show the hospitable culture of Filipinos
especially during the holidays, special occasions and tragic calamities. Also, the customers
will not even hesitate to buy since the prices of the products are still the same.
Implementation of the campaign will start at the last quarter of the year since it is the
Christmas season which is the season where people starts giving and donating to other
people.

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OUTCOME AND METRICS
The proposed corporate social responsibility strategies aims to not only help the business
internally, but it also aims to help give back to the society and the environment. The success of
all initiatives will be measured by the following outcome and metrics below.
Table 2.
CSR Outcome and Metrics.
Outcome domain Expected outcomes Expected metrics

Packaging shift from plastic to Percentage of plastic wastes of

Environmental paper Tropical Hut < 25%
protection WWF partnership campaign 30% decrease in annual food waste
implementation for the end of the first year
Increase of at least 10 workers per
branch
Professional Implementation of Joy to the
experience Unemployed campaign Increase in customer service
satisfaction percentage
Ratio of customer purchases to
foods donated to DSWD is 2:1
Implementation of Buy One.
Increase in total customer service
Share One. Campaign
and restaurant experience
satisfaction
Societal impact
40% of total website revenues are
donated to UNICEF and Red Cross

Implementation of Helping Hand Less complaints on poor delivery

campaign services

Increase in total site traffic and

customer online orders
Brand awareness
30% increase in total annual
Efficiency of all initiatives
customers

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IMPLEMENTATION PLAN
Promotion Strategy
We want Tropical Hut to become a brand that promotes and prioritizes the experience of
individuals over the actual product of the business. To effectively promote Tropical Hut given its
budget, the following are the proposed promotion strategies of the business:
1. Build up a strong social media arm
Common media preferences of the target market involve looking through promotions
through social media since this medium is the fastest and easiest way to dispose information.
Social media accounts will be created and refreshed such as Facebook, Twitter and Instagram.
Through this, social media users will be able to see the current promotions and activities done
by Tropical Hut and it will be an easy way for the viewers to spread the information through
sharing the post or tweet.
2. Engage in newspaper print ads
Since a target market of Tropical Hut tends to eat alone and reads various reading materials,
engaging through newspaper print ads will be helpful in raising awareness to the readers of
the newspaper. Ads in this medium will happen only during the implementation of the new
campaign or initiative in order to easily spread awareness among people of the country.
3. Website promotions
Since the refreshed website will be Tropical Hut's independent medium, posting different
advertisements and promotions inside. Since this website will be a bridge to a new target
market, it will be best that the website has a wide range of promotions and advertisements
to entice the viewers to purchase or be part of the campaigns. This will incur no additional
advertisement costs since the website is independently owned by Tropical Hut.

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Budget Proposal
Costs of all these corporate social responsibility strategies and promotions are vital to
Tropical Hut since they have been struggling in the market financially. The costs of each
initiative and promotion strategy are as follows:

Helping Hand Campaign

Website maintenance expense Php 60,000
Newspaper Advertisement Fee 27,000

Website personnel expense 70,000

Environment and Hunger Awareness Campaign
Paper packaging expense 70,000
Newspaper Advertisement Fee 27,000
Joy to the Unemployed Campaign
Newspaper Advertisement Fee 27,000

Human Resource Fees 11,000

Buy One. Share One. Campaign
Newspaper Advertisement Fees 27,000
Food donation shouldering cost 31,000
Partnership Fees
WWF 50,000
UNICEF 50,000
Philippine Red Cross 50,000
TOTAL BUDGET Php 500,000

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REFERENCES
https://wwf.org.ph/what-we-do/food/thesustainablediner/
https://www.bartleby.com/essay/Tropical-Hut-Case-Study-FKRJCS573G4Y
http://www.studymode.com/essays/Tropical-Hut-1622736.html
https://prezi.com/r8lfzdteiwpp/tropical-hut-presentation/
https://www.scribd.com/doc/124731043/Marketing-Research-Tropical-Hut
https://www.pinoybisnes.com/others/the-pros-and-cons-of-contractualization/
https://psa.gov.ph/gsearch?%2F=unemplopyment
https://psa.gov.ph/content/employment-rate-october-2017-estimated-950-percent
http://www.nashvillewrapscommunity.com/blog/2008/04/paper-bags-versus-plastic-bags-real-
numbers/
https://donate.unicef.ph/campaign/20/give-monthly?utm_expid=41204714-
3.y1Ls75qbQfutNvhP0n3qow.0&utm_referrer=https%3A%2F%2Fwww.google.com.ph%2F
http://integration.healthiernorthwestlondon.nhs.uk/section/how-do-we-define-outcomes-and-
metrics-

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