JOSE RIZAL UNIVERSITY

Shaw Boulevard, Mandaluyong City

TROPICAL HUT

A Strategic Paper
Presented to the Faculty of the
College of Hospitality Management

In Partial Fulfillment of the

Requirements for the Degree of
Bachelor of Science in Hospitality Management
Major in Cruise Management

SUBMITTED TO:
Professor Miller Mercado

ANCHETA, JOEY ALBERT

CAMBI, SAMANTHA ANN MAE
CORDERO, JAZZMIN VERNA MARIZZE
MAGBALANA, PRINCESS ANNE

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Table of Contents

CHAPTER I Introduction
Background 4
History of the Firm 5
Vision and Mission 6
Core Values 6
Organizational structure 7
Company Policies 7
Current Corporate Strategy 8
Marketing Strategy 8
Human Resources Strategy 10
Production Strategy 10
Financial Strategy 11

CHAPTER II Industry and Firms Environment

External Environment 12
Economic 12
Political and legal 17
Technological 19
Socio-Cultural 21
Task environment 22
Internal Environment 24
Marketing Resources 24
Human Resources 32
Financial Instrument 34

Marketing Mix CHAPTER III Situational Analysis

SWOT Analysis 39
Strengths 39
Weaknesses 40
Opportunities 41
Threats 42
TOWS Matrix Table 43

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CHAPTER IV Alternative Courses of Action
Alternative Course of Action #1 45
Alternative Course of Action #2 46
Alternative Course of Action #3 47

CHAPTER V Recommendation 48
CHAPTER VI Plan of Action 50

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 CHAPTER I

INTRODUCTION

Tropical Hut fast-food chain is the first thing that came into my mind when I think
of the non-performing company because I remember when I was just a kid, my mother
used to buy hamburger and sandwiches with fries for me and my brother after her duty
work in Makati and Tropical Hut is more famous before when we compare to today’s
generation.

Tropical Hut is considered one of the well-known fast-food chain in the

Philippines aside from Jollibee and McDonald’s but if you can notice, Jollibee and
McDonald’s are considered top competitors among fast-food chains here in our country.
Tropical Hut built in 1962 but in 1972, Mercury Group of Companies, Inc. acquired the
Company with the introduction of a Drugstore within the Supermarket. The pandemic
situation we experiencing right now is considered unexpected phenomena in business
matter, all the businesses whether it is a food business or not are being affected.

The food business industry is one of the most profitable yet most risky business
among all industry because food is essential needs of a person so food will click to the
market especially when the taste and the price of the product is friendly-market which
means the target market can afford the price ranges of the product. Tropical Hut fast-
food chain cut its branches to avoid the continues loss in the business, what happens in
the Tropical Hut is that the lack in improvement and innovative ideas in strategies and
tactics in their business flow operations are the ones that affects the overall
performance and success of the business.

Background

In the early 1960’s the Que family entered the world of business. They started
their own sari-sari- store which in 1962 had grown into a grocery store and rapidly
expanded into a Supermarket. It was also that year, when they conceptualize putting-up

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a coffee shop inside a supermarket and implemented it. Everything the family has built
was patronized by many Filipino at that time.

On February 26, 1965 Mr. Mariano Que introduced the Tropical Hut Hamburger in
Ortigas, Metro Manila Region, Philippines. This is when the family had the idea of
having a coffee shop within the confines of their supermarkets.

In 1980’s-1990’s competitors came and THFMI began to decline some of its

branches. It may have not move together with advancement and remained in to its
original state which has brought it now to its declining stage.

History of the Firm

It started in 1962 when Que family had this idea of putting up a coffee shop within
the confines of their supermarket. With its place strategically located near
supermarkets, it has been attracting families and friends for lunch or light snacks after
grocery time. Tropical Hut is one of the oldest fast food chains in the Philippines. It is a
local fast food chain that made the burger become popular. It was first established in
Cubao during 1962. Filipinos love or food makes usfans of different cuisine.
Hamburgers, a ready-to-eat comfort food introduced by the Americans, have undeniably
become staple on Filipinos everyday food. From a variety of hamburgers, Tropical Hut
also offers a spread of affordable rice meals, sandwiches, and desserts that will surely
satisfy your everyday cravings. Tropical Hut managed to capture every Filipinos taste
bud through their affordable and delicious offerings. In 1965 Tropical Hut is reputedly
the first hamburger choice in the Philippines. Mission of Tropical Hut The pursuit of
excellence in proving the general public with superior quality products of
competitive/reasonable prices as well as prompt, convenient, courteous, friendly and
effective service. On 1978 Tropical Hut is considered as top producer of burger in the
Phillippines.

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Mission

To provide the general public with superior quality products at competitive and
reasonable price as welll as prompt, convenient, courteous, friendly and efficient
service.

Vision

To become the No. 1 food service and merchandising in the country. With human and
technological resources at part with the best in the world.

Core Values

4 C’s OF OPERATION

1. CONSISTANCY

We have to be consistence in giving good service to our customers, providing quality

food and clean surroundings at all times.

2. COOPERATION

We need to foster good team work in order to achieve the best results in our daily
undertaking.

3. COMMUNICATION

We need to communicate with our team in order to familiarize ourselves with the
implementation of company policies.

4. CONTROL

We need to have better control in the operations in order to achieve the goals/objectives
in delivering profitability to our company.

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Organizational Structure

Managing Director

Marketing Director HR Director Chef Operating Customer Care Head of Finance

Manager
Offices

Secretary 2 IT Executive 6 Executive

2 Marketing 2Executive
Executive
2 Purchasing
Recruitment
Call Centre
Managers
Manager
Operation Controller
Training Manager

CGM (Cluster General CGM (Cluster General

Manager) Tropical Hut Manager) Tropical Hut

7 Restaurant 7 Restaurant
General Manager General Manager

3 Shift Managers 3 Shift Managers

Crew Members Crew Members

Company Policies

The following are the policies implemented in Tropical Hut:

 Equal opportunity policies - This policy enable the equal opportunity in all
employees that will help them to improve individually.

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  Workplace health and safety- Since Tropical Hut is a food business, health and
safety policies should always prioritize in the workplace.
 Employee code of conduct policy.
 Attendance, vacation and time-off policies- This policy will help both the business
and its employees to have a smooth business flow in the workplace.
 Employee disciplinary action policy- This will help the company and the
employees to avoid conflict in the workplace.
 Employee complaint policies.
 Ethics policy.
 Work schedule and rest period policies- This is also connected to the employee’s
rights so that no businesses can abuse their power.

Current Corporate Strategy

It’s now the current and proposed selling proposition statement the unique selling
proposition statement of Tropical Hut from “Sa Sarap Tropical Hut” move to
“KatropasaSaya” They collaborated in this positioning to call the a mention of publics to
dominant the market spreading its awesomeness and market then feel good once
tested that they’ll surely to one another. Sharing the happiness in every order of burger
gives out a big smile in your heart.

The concept of their logo comes from their aim to enhance and be well recognized
where it emphasized the great blends of burger as their originally offered products in the
market.

Marketing Strategy

The main marketing strategy of Tropical Hut is the rebranding of store wherein the
management aims for a new start for the business aside from the improvement in the
hamburgers to other food products, the management also aims to improve the overall
atmosphere of the business. They believe that the modernization in the product
offerings and promotional gimmicks and the overall facilities improvement will gain
attention to the people who pass by aside from their loyal customers.

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To provide continence for customers such as

 Implementing Drive-Thru (Drive and Go)

 24 hour Delivery Service

To improve pleasure/fun for customers

 Aesthetics settings Ambiance of Tropical Hut

 Better Advertisements

Place innovation

Place innovation is significant tool on enhancing customers to keep their

sympathy and be more accessible by serving the comfort and easiness with the
premises. They proposed to make a change in location of particular facility and
equipment. They will be having an area segregation, they wanted to maintain the lively
ambience and much accommodated place where you feels like home and giving friendly
service.

Television advertising

With the help of this advertising, the new product lines will be introduced and will
give a strong impact of retention in the mind of their target market. serve the usual
Sandwich-based food, they serve big meals definitely aimed to keep you full at
breakfast.

Mobile game gear

Introducing the Mobile game gear, a toy phone and a game player with a flashlight
in one. Everything you would expect from Top Gear squeezed into a game you can take
anywhere. The kids will enjoy this toy. They do believe in our bright ideas can attract
and capture the expectation of our valued customer.

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Proposed back pack

Another proposed product lines where they primarily concerned. A back pack for
everyone. The customer will enjoy it. You can have it for only 99 pesos each for every
value meal purchase. Halo- halo for you another proposed product line halo-halo for
you. You can have it for summer. This concept allows creating their own way on how
they will be more contended in the taste and experiencing the delightfulness upon
selection.

Proposed Product Packaging

It will be their intended change in the product packaging. Lower the manufacturing
cost yet quality output. The objective in this concept is to be more ecofriendly in the
mind of their market. They used a type of bag which designed non-transparently. The
appeal looks traditional and authenticated design

Human Resources Strategy

The human resources strategy of Tropical Hut is more on improving the customer
service satisfaction in the fast-food and to assign average number of employees each
branch.

Production Strategy

The production strategy of Tropical Hut is a product rebranding which means their
products will enhance when it comes to the appearance, size, taste and even their
prices. The company also wants to include the advantages of technology to the
business since it helps to decrease cost production time in the business operation.

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 Tagline of Tropical Hut “SarapnaBabalik-balikan” has been a tagline for the past
four decades. They also described their burgers, as “Its big it’s hot. It’s fresh”. Meaning,
they are not changing their way of advertising their product. They are not innovating.

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.

Financial Strategy

The current financial strategy of Tropical Hut is to allot 200 million to rebranding of
overall appearance and services offerings of the restaurant.

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 CHAPTER II

INDUSTRY AND FIRM ENVIROMENT

This chapter focuses on the internal and external business environment of

Tropical Hut Fast-food Chain to determine the factors that will help the business growth,
success and ways on properly management of overall business operation and different
factors that need to consider in able to avoid conflicts in organization. Through
Scanning of external environment, the business is able to acknowledge potential
opportunities and threats outside of the business operation. Economic is the changes in
the environment that affects the business growth. Political and Legal are the policies
and laws need to consider in compliance to the business requirements that have a
significance to the business operation and Government guidelines. Technological are
the newly inventions and innovations that has involvement in used of technologies for
business modernization. Socio- Cultural is something that involves socio and cultural
aspects, it is all about the different characteristics such as age, race, sex and etc. Task
environment is more on the business competitors, customers, suppliers, regulators and
strategies of the business. Each of this factors affects how the business will operate.
Internal factors however include the company’s flow of work, the number of employees,
system being followed within the company and the nature of sales and marketing.

External Environment

Economic Environment
If the county’s economy is better so the GDP of the country will be good, this is a
green signal for the business as the per capita income of the people will being creased
and they will spend more money. The researcher came to know that most of the people
in the beginning of the months spend more and they visit tropical hut very often. When
the inflation rate increases the cost of raw material also increases and this leads
towards high prices of the products and vice versa.

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GDP Trends

According to the 2020 estimate of the International Monetary Fund's statistics,

the Philippines' economy is the world's 34th largest by nominal GDP, the 13th largest in
Asia, and the third largest in ASEAN after Indonesia and Thailand. The Philippines is a
developing country that ranks sixth in Southeast Asia in terms of GDP per capital.

Semiconductors and electrical goods, transportation machinery, clothing, copper

products, petroleum products, coconut oil, and fruits are all major exports. Japan,
China, the United States, Singapore, South Korea, the Netherlands, Hong Kong,
Germany, Taiwan, and Thailand are all major trading partners. Together with Indonesia,
the Philippines has been designated as one of the Tiger Cub Economies.
Its economy is currently one of Asia's fastest growing. However, major issues
remain, most notably the large income and growth inequalities between the country's
various regions and socioeconomic groups, as well as the need to reduce corruption
and invest in the infrastructure needed to ensure future growth.
By 2050, the Philippine economy is expected to be the 16th largest in the world
and the seventh largest in Asia. According to Price Waterhouse Coopers, it is expected
to be the world's 12th to 14th richest economy by 2060. Although this contradicts other

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HSBC Holdings PLC findings, that by 2050, the Philippines' economy would have
surpassed Indonesia's due to its 6.5 percent annual GDP growth rate (Second, after
China). However, economic figures can vary year to year based on the government's
results.

Interest Rate
The central bank of the Philippines left the key overnight repo rate steady at 2%
on March 25th 2021, in line with expectations. The overnight deposit rate and lending
facilities were also left on hold at 1.5% and 2.5%, respectively.

Money Supply

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 Money Supply M3 in Philippines averaged 2973834.59 PHP Million from 1980
until 2021, reaching an all-time high of 14207557.10 PHP Million in December of 2020
and a record low of 56544 PHP Million in January of 1980. This page provides -
Philippines Money Supply M3 - actual values, historical data, forecast, chart, statistics,
economic calendar and news. Philippines Money Supply M3 - values, historical data
and charts - was last updated on April of 2021.

Inflation Rate
The annual inflation rate in the Philippines fell to 4.5% in March 2021 from a 26-
month high of 4.7% a month earlier, less than market consensus of 4.8%. Prices eased
for food and non-alcoholic beverages (5.8% vs 6.7% in February), alcoholic beverages
(12.1% vs 12.2%), furnishing (1.9% vs 2.4%), communication (0.2% vs 0.3%), and
restaurant and miscellaneous goods and services (3.1% vs 3.2%). In addition, cost of
recreation fell further (-0.6% vs -0.7%). At the same time, inflation was steady for
clothing (at 1.6%), housing (at 0.9%), health (at 2.9%), and education (at 1.1%), while
transport cost went up faster (13.8% vs 10.4%). The latest reading, however, remained
above the central bank's target of 2 to 4%. On a monthly basis, consumer prices
dropped 0.2%, the first fall in 7 months, and after a 0.2% rise in February002E
Unemployment level

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 The unemployment rate in the Philippines surged to 8.7 percent in the March
quarter of 2021 from 5.3 percent in the same quarter a year earlier, amid the downturn
caused by the coronavirus crisis. The number of unemployed persons jumped by 1.56
thousand to 3.95 million, while the number of employed dropped by 1.3 thousand to
41.25 million. Meanwhile, the labor force participation rate was down to 60.5 in the first
quarter from 61.7 the prior year. Among employed persons, workers in the services
sector made up 57.2 percent of the total, followed by those in the agriculture sector
(24.4 percent) and industry (18.4 percent). For full 2020, the jobless rate surged to 10.3
percent from 5.1 percent in 2019, reflecting the economic fallout due to the pandemic.

Wages
Wages in Manufacturing in Philippines averaged 80.42 points from 1995 until

2020, reaching an all-time high of 123.66 points in the third quarter of 2019 and a record
low of 48.63 points in the first quarter of 1995. This page provides - Philippines Wages
in Manufacturing Index - actual values, historical data, forecast, chart, statistics,
economic calendar and news. Philippines Wages in Manufacturing Index -values,
historical data and charts - was last updated on April of 2021.

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Consumer spending
Consumer Spending in Philippines averaged 821785.28 PHP Million from 1981
until 2020, reaching an all-time high of 3651785.61 PHP Million in the fourth quarter of
2020 and a record low of 305524.42 PHP Million in the first quarter of 1981. This page
provides - Philippines Consumer Spending - actual values, historical data, forecast,
chart, statistics, economic calendar and news. Philippines Consumer Spending - values,
historical data and charts - was last updated on April of 2021.

Political — Legal
Tropical Hut has a made reasonable effort to provide nutritional ingredient
information based upon standard product formulation and following the FDA guidelines
using formulation and nutrition labeling software. Variation may occur due to: ingredient

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substitution and differences in product assembly or size at the restaurant. Test products,
limited time offers and regional menu variations may not be included and not all items
listed may be available in all restaurants.
1. Tax Reform Act of 1997 (Republic Act No. 8424) —which amended the National
Internal Revenue Code (NIRC) is the law that governs the national taxation in the
Philippines and gives the Bureau of Internal Revenue (BIR) the power and duty
to assess and collect national internal revenue taxes in the country.
2. The Local Government Code of the Philippines (Republic Act No. 7160) — is the
law governing local taxation in the Philippines, including the taxation on real
properties.
3. Labor Code of the Philippines (Presidential Decree No. 442) — is the law
thatGoverns employment practices and labor relations in the Philippines.
4. Intellectual Property Code of the Philippines (R.A. 8293) — is the law that
governs the registration of patents, trademarks and copyright, and the
enforcement of intellectual property rights in the Philippines.
5. The Corporation Code of the Philippines (B.P. 68) — is the law that governs the
registration and regulation of corporations in the Philippines.
6. Civil Law of the Philippines (R.A. No. 386) — the civil code of the Philippines
includes the laws on obligations and contracts. It also governs special contracts
such as contract of agency and partnership.
7. Social Security Act of 1997 (R.A. No. 8282) — the law that mandates employers
to register their business and their employees with the Social Security System
(SSS)
8. National Health Insurance Act of 1995 (R.A. No. 7875) — the act that mandates
employers to register their business and their employees with the Philippine
Health Insurance Corporation or PhilHealth.
9. Food and Drug Administration (FDA) Act of 2009 (R.A. No. 9711) — the law that
governs the inspection, registration, licensing and monitoring of establishments
and health products.
10. Consumer Act of the Philippines (Republic Act No. 7394) — The law that protects
the interest of the consumers in the Philippines, promote their general welfare,

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 and establish standards of conduct for business and industry.
11. Electronic Commerce Act of 2000 (R.A. 8792) — an act providing for the
recognition and use of electronic commercial and non- commercial transactions,
penalties for the unlawful use thereof, and for other purposes.
12. Insurance Act of the Philippines, as amended — the law that governs the
insurance business and insurance transactions in the Philippines.
13. Foreign Investments Act of 1991 (R.A. No. 7042) — the law that governs foreign
investments in the Philippines.
14. The Anti-Red Tape Act of 2007 (RA 9485) —an act enacted to improve efficiency
in the delivery of government services to the public by reducing bureaucratic red
tape, preventing graft and corruption in all the offices of the government.

Technological
Now a day’s technology is improving so as baking and heating ovens will be of
new and efficient technology and will provide efficient service. Due to new technology
there are new ways of marketing like internet; telemarketing and the organization can
advertise their products with much more faster pace. Computer based customer data
that is MIS (managing information system) helps in collecting customer data, daily
transactions, future forecasting and decision making. New vehicles will make their
service more efficient.

Energy availability and cost

The Manila Electric Company (Meralco) cut rates in February, as the generation
charge has decreased. In a statement, Meralco said overall rates have been slashed by
P0.0704 per kilowatt hour (kWh) to P8.6793, from P8.7497 in January.
Meralco attributed the decrease to a lower generation charge of P4.4152, which was
reduced by P0.0422 from the January charge. Lower fixed charges from power supply
arrangements contributed to the lower generation charge.
Due to lower ancillary service charges, transmission charges for residential customers
decreased by P0.0218 per kWh, while taxes and other charges decreased by P0.0154

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per kWh. The Energy Regulatory Commission requested a refund for excess
collections, which resulted in a price reduction.

This is equivalent to a decrease for households consuming the following:

 P14.08 for 200 kWh

 P21.12 for 300 kWh
 P28.16 for 400 kWh
 P35.20 for 500 kWh

Telecommunication Infrastructure in Philippines

In the Philippines, telecommunications investment will continue to place a greater
focus on promoting high-speed broadband connectivity. The majority of fixed services
are found in urban areas. In comparison, the Philippines' fixed-line industry is still
underdeveloped, with fixed-line penetration stagnating. The mobile segment's
dominance and the rapid growth of the mobile broadband segment are two big reasons
for this.
PLDT has remained the Philippines' dominant fixed-line provider despite rivalry
from new carriers and mobile operators. Globe Telecom, in particular, has been working
hard in recent years to overtake the incumbent and is now the leading mobile operator
in terms of total subscribers.
As new providers join the Southeast Asian data center market, there have been
substantial new data center builds and additions to existing capacity over the last five to
ten years, especially in the last two years. If more people go online and use cloud
storage services, demand for data center services is increasing.
The Philippines' expanding middle class and young population are also important
drivers of IT demand, as their spending on technology goods is increasing, benefiting
premium brands. Another source of opportunity in the Philippines is infrastructure
investment. Design software, building information modeling (BIM) for better project
management, and file-sharing applications will be required at a minimum for the road,
railway, airport, bridge, and port systems installed. Demand for hardware, software, and

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services will be fueled by these factors.
Economic and population growth further signal the dire need to invest more in
modernizing digital infrastructure, which has only been accelerated by the pandemic.
Philippine mobile internet speed is 14.24 Mbps (world average 30 Mbps), and
fixed broadband speed is 23.80 Mbps, according to the Speed test Global Index (global
average 74.64 Mbps). For several years, the Philippines' internet speed was slower
than Syria's and was the slowest in Asia.
Owing to a long-standing duopoly between two major players, cellular coverage
is at best patchy. This has discouraged investment in the market. Just 20,000 towers
exist in this country of 109 million inhabitants and 7,000 islands. A third player and
popular towers are expected to emerge as a result of regulatory changes, but vested
interests maintain close ties with the government in order to draft policies that benefit
them.
Even after filing taxes or other paperwork electronically, government procedures
are paper-based, requiring the submission of physical papers. However, due to the
pandemic, digitization efforts have been called for and should continue.
However, in order to establish guidelines and implementation protocols for ICT
solutions, the government would need funding and master planning assistance. The
Department of Information and Communication Technology was established in 2016,
but due to a number of factors, including constant staff turnover, it has been unable to
set national standards or lead on policy issues.

Socio-Cultural

Commitment to possibly impact the communities we serve has always been a

hallmark of Tropical Huts. Everyday our branches give back to their communities in a
number of ways through their involvement with local charitable programs and initiatives.

Labor Workforce
If there will be no importation due to the Government instability, then there will be no
available work for the fresh graduates of the country. According to the Commission on
Higher Education (CHED) statistical analysis of the graduates of state universities and

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colleges in the country, there is a grand total of 280,796 prospective student graduates
that will look for a job after they graduate. This would provide a chance for the PRBL to
get possible employees with fresh skills and will to work and harnessing their skills as
newly graduates for them to grow larger and reach towards their goals.

Task Environment
Governments
Regulatory agencies are created by local government for the purpose of ensuring
that organizations operate within the enacted laws. These agencies have the power to
enforce laws in their respective fields and also introduce some of their own
requirements that can be legally enforced. These agencies are basically set up to
protect the public from certain business practices or to protect organizations from unfair
competition.

New Entrants
Fast food industry have big players that dominating the market. However, there
are new companies entering market that adds to the level of competition. Such as
Zarks’s Burger, S&R New York Style Pizza, and Subway. Zark’s Burger is owned by
Zark E. Varona, HRM graduate from Philippine Women's University, Zark’s Burger offers
a wide variety of Burger with a competitive price aside from that Zark’s Burger also
offers hotdog sandwiches, Buffalo wings and chips, chix N’ chips, Fish N’ chips, Burger
steak, french fries, potato chips, nachos, Rice starter, desserts and drinks. S&R New
York Pizza Style is owned by Sol & Robert. S & R is a membership shopping warehouse
type store and they expand their business by putting up S & R Newyork Pizza Style.
The food offerings from S & R New York Pizza Style are their famous wide variety of
Pizza, also they have burgers, sandwiches, chicken, ceasar salad, pasta and fries.
Subway started by Fred DeLuca and fund by Peter. Subway is originated in California,
by 1974 they began franchising here in the Philippines there are 23 outlets of Subway.
The Subway brand has earned a worldwide reputation for offering a nutritious
alternative to traditional fast foods. All SUBWAY sandwiches and salads are made to
order, right in front of you, to your specifications, using the ingredients you select from a

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wide variety of meats, vegetables, fresh baked breads and flavorful condiments and
Sauces.

Substitute products
A substitute product is one that may offer the same or similar benefits to a
company as a product from another industry. As per Philippine Stocks Exchange,
restaurant industry leads the sector in terms of number of establishment. Fast-food
chains ranked second with 4,477 establishments or 16.6 percent, followed by
refreshment stands, kiosks and counters with 3,772 establishments or 14.0 percent. So
there a wide range of a substitute product. Major Competitor of Tropical Hut are
Jollibee, and McDonalds who has a wide range on product offerings and product
innovations and The new companies entering in the food industry such as Subway who
has offering a nutritious meals, S & R New York Pizza Style has a product offerings of
pizza.

Buyer/Consumer
Tropical hut core values is to be consistent in giving good service to our
customers, providing quality food and clean surroundings at all times. THFMI target
market are Families who are in the middle class and working class. Their target
consumers are those people who are looking for a quick service because of the busy
life style.

Supplier
Tropical Hut main suppliers are MLM Food Inc, and Coca-cola Company.

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Internal Environment
Marketing Resources

Marketing Mix

Pricing
The fact that Tropical Hut was making a good profit even during the time of
recession is a clear reflection of the fact that they have a well-developed pricing
strategy. They are one of the few restaurants that have a very well established 1£ menu
as well. This pound menu not only includes only one item it has a mix of all products
that can be bought. Thus, it is not only cheap but also provides variety for the customers
to choose from. Even the regular meals are priced rightly. Hence the customers do not
hesitate. Thus, in short one can surely say that dining at Topical Hut is not a good
experience that is not too heavy on the pockets.

Customer Service
This operation forms the base of the organization. The aim of the company is to
make the experience at the restaurant a unique one. This is only possible by providing
excellent customer service. The company trains the newly recruited employees for
providing excellent customer service. The crew members are asked to be sensitive to
the needs of the customers. Although they have a protocol to treat the customers the
employees are given the liberty to act according to the need of the situation. Especially
in the case of senior employees and mothers. The company strongly believes that only
if a customer is comfortable at the restaurant will they come back. Hence all measure is
taken by the store employees to make sure that the customers are completely satisfied
when they leave. They also have crew training program on a regular basis to upgrade
the service and to develop new skills. Regular meetings are conducted to deal with any
issues that are faced by the employees. The company also promotes the crew
members to take part in the various program that are conducted by the company. Thus,
motivating the employees. The company does annual appraisal in terms of salary as
well as position based on the employee’s performance.

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Product

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 Pro
motions

In the current time, Tropical Hut do have an existing promotions and

advertisement provided t the public. These promotions are available and seen around
metro-manila. The following are the examples of promotions done by the business.

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Place and Distribution
Tropical Hut Food Market, INC. is located at #74 Elisco Rd. Barangay Kalawaan
Sur, Pasig City, Metro-Manila, Philippines. It currently has a total of 30 branches which
are the following:

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Competitors
The major competitors of Tropical hut is Jollibee, McDonalds, Burger King, and
Wendys. Jollibee and McDonalds has a competitive advantage when it comes to capital
budget, product deveIopment,and marketing schemes. Jollibee owned 57% share at the
market, McDonalds occupied 36% share of the market and the rest was divided among
other fast food chain.

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 Market Competition

Human Resources
Number of Employees
Tropical Hut Hamburger currently have 501-1000 employees on their company
as of 2019.

Retirement Benefits
It is available in the form of refunds from the plan or reductions in future

33
contributions to the plan.

Employee Benefits
Tropical Hut Hamburger recognizes short-term employee benefits based on
contractual arrangements with employees.
Tropical Hut gives their Regular Employee Benefits such as Dental, Education
Support, Loans, Medical, Miscellaneous allowance, parking, rice allowance, leave
benefit, Uniform, Vision.

Production and Operation Resources

Production and operations management can be explained as providing the finest
service at the lowest possible prices. This objective can only be achieved if each and
every operation within the organization is managed optimally. The various operations
within an organization that needs to be managed are financial operations, capital
management and human resource management. Operations management is concerned
with the accurate management of the various operation within any kind of organization
so as to maximize results by minimum use of resources. Thus, for any organization to
perform successfully, it is mandatory to strictly monitor the smooth functioning of the
various operations within the organization. Thus, in brief the role of operations
management is to transform the input into output in an efficiently manner.

The benefits of effective operations management:

 Improves the productivity of the organization.
 Minimizes the cost of the organizations.
 Helps in forecasting the various trends within the market.
 Avoids duplication of work.
 Helps in intelligent use of resources.
 Guides the company to provide excellent services and products.
 Helps in developing solutions for the various problems faced by the organization.

There are many operations within the organizations. The main operations within

34
Tropical Hut Hamburger are:
 Procurement of raw materials and machinery
 Production and Quality Maintenance
 Pricing
 Customer Service

Procurement of raw materials and machinery

The main strategies used by Tropical Hut Hamburger have to maintain the
inventory is JIT, Just in Time. According to Modem, “JIT can be defined as a production
system to produce a kind of unit needed, at the time needed and in the quantities
needed” (W.JedIicka, 2009). The idea behind this is to reduce the cost of inventory
management. This also helps in providing fresh food to the customers. This strategy is
successful since the mangers in the restaurants do a daily stock count at the end of the
day to keep a track of the available things and things that have to be ordered.

Production and Quality Maintenance

The kitchen crew is trained to produce the products by following a standard
protocol. Every product that is created in the Tropical Hut kitchen has to follow the
protocol so as to maintain the standard and quality of the products. Handling the
production bin is a very important task. Every item that is produced has a certain shelf
life after which it is declared to be unfit for consumption. Hence the food items are
produced slowly on the basis of demands. During the busy hours there is always a
manger on the production bin who manages the bin. It is only during this period that
food is created a little in excess based on the expected crowd of customers. This is a
strategy used by the restaurant to avoid long quest and to provide fresh food at a faster
pace.

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Financial Statement

Tropical Hut Food Market, Inc.

Statement of Cash Flows
For the years ended December 31, 2015 and 2014
(In Philippine Peso)

2015 2014

Cash Flows from Operating Activities

Net loss before Income tax (16,576,818) (31,198,600)
Adjustments provided by (used to) operating activities
Depreciation and amortization (Note 2, 3 and 9 18,451,040 23,426,546
Internet and divided income (Note 2) (121,286) (118,177)
Internet expense (Note 2 and 22) 7,766,763 2,930,678
Changes in operating resources and liabilities
Increase (Decrease) in:
Accounts receivable (Notes 2 and 7) 21,972,814 9,044,299
Prepayments (Notes 2 and 8) 1,583,232 495,534
Inventories (Notes 2 and 3) (832,887) 47, 439,7994
Increase (Decrease) in:
Accounts Payable and accrued expenses (Note 2, 13 and 16) (12,782,361) (39,940,263)

Cash Generated from operations: 19,460,588 12,079,811

Interest received (Note 2) 121,286 118,177
Interest paid (Notes 2 and 22) (7,766,763) (2,930,678)
Income tax paid (Notes 2, 3 and 12) (4,325,337) (4,540,667)

Net Cash Provided by (Used in) Operating Activities 7,489,774 4,726,643

Net Increase (Decrease) in Cash 2,109,238 (4,435,815)

Cash, Beginning 45,928,076 50,363,891

Cash End 48,037,314 45,928,976

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 Tropical Hut Food Market, Inc.
Statement of Comprehensive Income
For the years ended December 31, 2015 and 2014
(In Philippine Peso)
2015 2014

Sales, set (Notes 2 and 19) 1,387,365,358 1,488,395,653

Cost of Sales (Notes 2 and 20) 954,579,162 1,047,688,131

Direct Costs (Notes 2 and 21) 242, 516, 652 261,134,953

1,197,095,814 1,308,823,084

Gross Profit on Sales 190,269,544 179,572,569

Miscellaneous Income (Notes 2) 37, 879,541 39, 154,417

228,149,085 218,726,986

Operating Expenses (Notes 2 and 22) 244,847,189 250,043,763

Net Operating Loss 16,690,104 31,313,777

Income subjected to final tax 121,286 118,117

Net Loss Report Income Tax 16,576,818 31,192,600

Provinces for (Benefit from) Income tax (Note 2 and 11)

Current (3,132,083) (9,308,409)
Non-Current 16,080,291 21,092,367

12,948,208 11,711,958

Other Comprehensive Income

Total Comprehensive Loss29,525,826 42,916,558

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 Tropical Hut Food Market Inc.
Statement of Change in Equity
For the years ended December 31, 2015 and 2014
(In Philippines peso)

2015 2014
Share Capital (Notes 2 and 17)
Authorized Capital Stock Php 500,000,000
5,000,000 common shares @ 100 per value
Issued and Outstanding 2,400,000 shares 240,000,000 240,000,000

Accumulated Loss (note 2)

Accumulated loss, beginning 112,282,869 69,372,311
Net loss 29,525,026 42,910,558
(141,807,895) (112,282,869)

Equity End 98,192,105 127,717,131

See accompanying notes to financial statements

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 Chapter III
Situational Analysis
In this chapter, the analysis can also help distinguish abilities in Tropical Hut in
terms to satisfy the necessities of the correspondence plan before it is developed to
implement the strategy. It also serves to feature areas in the Strategy where
improvements should be made, to assess the current or circumstance. Developing
situation. It is the collection and evaluation of past and present identification of the
internal and external forces that may influence the organizations performance.
Situational Analysis is the systematic collection and evaluation of historical and current
economic, political, social, and technological data with the goal of identifying internal
and external factors that may affect an organization's success and strategy selection, as
well as assessing current and potential strengths, vulnerabilities, opportunities, and
challenges.

Strengths

S1 – Brand identity

Tropical Hut Hamburger is one of the oldest fast food in the Philippines. It started
in 1962 when the Que family had this idea of putting up a coffee shop within the
confines of their supermarket, thus Tropical Hut Hamburger was born. Many Filipinos
still consider Tropical Hut is the original burger in the Philippines. It still remains to be
one of the juiciest, most satisfying burgers, not only for cooking technique but also for
the years of nostalgia you can taste.

S2 – Largevariety of Product

Tropical Hut offers hamburgers in different sizes and also offers distinct Filipino
breakfast meals, sandwiches, pasta, chicken unli rice, family savers chicken, rainy
savers such as burger steak with chicken shanghai, Hawaiian Glee with chicken soup,

39
fish fillet with chicken macaroni salad, spaghetti with chicken and All-time favorites such
as Halo – halo with ice cream, Black gulaman float, fresh salad, tuna green salad, fruit
salad, macaroni salad, chicken sopas, and French fries.

S3 – Capital Capability

THFMI's gross profit margin increased by 0.91 percent in 2015, while its net profit
margin increased by 0.75 percent, its return on equity increased by 3.53 percent, and its
gross profit was 190, 269 dollars.

THFMI Cash flow rose by 48, 037, 314 in 2015, bringing the total to 45, 928, 376.

Weaknesses

W1 - Lack of marketing strategy

Lack of promotional strategy affect the level of brand awareness in the market
that led to Tropical hut weaken to reach their prospects and target market. Tropical hut
is also lack on collaboration on online delivery app that could help them grow their
business and reach their target market.

W2 - Old structural design

Customers nowadays enjoy taking selfies or groupies while relaxing in their

favorite restaurant. As a result, structural design and ambiance are extremely significant
in the food industry because they aid in attracting and retaining customers. Tropical
Hut's structural architecture, on the other hand, is outdated, old, and unclean, which
does not attract customers. The lack of structural design renovations at Tropical Hut
reduces the appeal and desire of customers.

40
W3 – Lack of Distribution Channel

In the Philippines, Tropical Hut has a total of 30 locations. There are 24 branches
in Metro Manila, 4 branches in Rizal, and one branch each in Pampanga and Cavite.
Since Tropical Hut lacks a distribution channel, the market will experience a decline,
affecting sales growth. Customers could move to another brand that is more available to
them.

Opportunities

O1 – E- Commerce

Nowadays people are more technology savvy, in online platforms such as

facebook, Instagram, twitter or other websites. This could help the tropical hut to
promote and attract customers using these platforms.

O2 – Enhancing market in Rural

Since some provinces are expanding, the demand or customers are now more
dispersed across the Philippines, not just in Metro Manila. The market in the Visayas
and Mindanao region, specifically in IIo-iIo, Cebu, Davao, Naga, and Leyte, is still
growing and can be a major factor in the firm's success.

O3 – Lifestyle

THFMI has a growth opportunity due to consumers' growing preference for fast
food over cooking at home. This tendency is also attributed to the hectic lifestyles of city
dwellers. These lifestyles make it more likely for customers to eat at restaurants like
THFMI rather than cooking at home.

41
Threats

T1 – Change in consumer tastes preference

The changing tastes of customers can have an effect on Tropical Hut's sales.
Tropical Hut has decided to offer an unli rice partner with chicken as a menu alternative
to MangInasal due to the growth of the unlimited rice market. Changing tastes, such as
a greater emphasis on fitness, have forced brands like Tropical Hut to adapt or risk
losing sales. Tropical Hut would need to make changes to their menu to include low-fat
options. Because of the ongoing concerns about obesity, Tropical Hut has had to
provide healthier options for all of its customers, especially children.

T2 – Substitute Product

Many replacement items for Tropical Hut's burger, such as shawarma and pizza,
are now in high demand in the market to satisfy customers' hunger. This replacement
product has the potential to steal the firm's market. Burger can be seen on any
establishment nowadays, for the tropical hut to gain and attract customers again
thinking and making way on having a substitute product can help them to reach their
market level.

T3. Growing Competition

Target market is one of the most crucial factor that the business have especially
that Tropical Hut is a fast food chain and we all know that Jollibee and McDonalds are
the top grossers among fast food chains. The variety of choices of products and
services that the competitor can offer can affect the overall operation in the business.

42
TOWS Matrix Analysis
Strength (S)
Internal factors and S1. Brand Identity
External factors S2. Large Variety of Products
S3. Capital Capability
Opportunities (O) SO
O1. E-Commerce S2O1. use E-commerce to
O2. Enhancing market in have awareness to introduce
Rural those unfamiliar products to
O3. Lifestyle millennials
S3O2. Use your capital
capability in Enhancing Market
in Rural
Threats (T) ST
T1. Change in consumer S2T1T2. Add new products
taste preference like milk tea and different
T2. Substitute Product flavors patty aside from pork
T3. Growing Competition and beef use fish fillet for
burger.
S3T2T3. Invest more on
adding products and utilities
that would make your brand
Weaknesses (W)
W1. Lack of marketing
strategy
W2. Old structural design
W3. Lack of Distribution
Channel
WO
W1O1. Invest in E-commerce
platforms to promote the
brand and reduce the
expenses
W3O2. Invest more in
promoting and expanding
your brand in Rural Areas
WT
W1T1. Reduce the
productions to lessen the
expenses.
W2T2 Basis with other
competitors
W1T3 Cost cutting of
products to lessen the
43
soar again. expenses

44
 CHAPTER IV

ALTERNATIVE COURSES OF ACTION

ACA #1 S201 - use E-commerce to have awareness to introduce those unfamiliar

products to millennials

Advantages:

- Using e-commerce in your company would remove geographical barriers,

allowing you to attract new customers through search engine exposure.

- E-commerce allows you to save money. The customer is responsible for the
costs incurred by a product or service provider in collaboration with an
intermediary. The consumer does not have to pay as much money if there are no
middlemen. Products sold on the internet are typically less expensive than those
sold in stores.

- The Internet is the primary medium for conducting e-commerce transactions.

Customers may use it to find out more about a product, compare prices and
benefits, and decide if it is worth the cost. Customers can also find warranty
material on the internet, which includes product specifications and other
specifics. You are fully aware of the terms and conditions before buying the
items.

Disadvantages:

- Approach that is impersonal. Since the buyer does not interact with the seller
face to face, there is a risk of mistrust. As a result, some consumers are wary of
making purchases over the Internet and prefer to make purchases in person,
where they can speak with the vendor and see or touch the items.

45
 - Customers have concerns about privacy and security. Some consumers are still
hesitant to give out personal information online, especially credit and debit card
numbers. Since fraud has risen as the eCommerce industry has grown, online
stores must have secure systems, encrypted payment software such as
Lightspeed Payments, and other protections against online fraud.

ACA #2 S3T2T3. Invest more on adding products and utilities that would make
your brand soar again.

Advantages:

- Make an effort to reach out to a new community of customers. Even if you

already have a well-established customer base, there is always the possibility of
gaining new customers as your company grows, particularly if that growth
includes the launch of new products and services.

- Another advantage of moving into new markets is economies of scale, which

means that as the company expands, retailers and suppliers are more likely to
give you deals because you're buying in greater quantities.

- Provides you with the ability to sell a wide variety of goods and services. You can
diversify the sales stream this way, which means you aren't solely dependent on
selling one core product or service.

Disadvantages:

- Quality compromise - raising your production output can result in a drop in

quality. in quality, which can result in customer or sales loss

46
 - Loss of control - when your company expands, you will need to delegate
management responsibilities or split workloads from various locations.

- Increased capital needs - a larger company means a larger workforce, which

necessitates more capital, more facilities or equipment, as well as an increase in
investment

ACA #3 W2T2 Basis with other competitors

Advantages:

- The benchmarking mechanism aids in increasing the competitiveness of

companies that operate in the same industry.

- When it comes to doing business and operating a profitable company, the

majority of the time, the company will face stiff competition from other
businesses. And that rivalry aids the existing company in maintaining their
current position in terms of its success rate.

- One of the most significant benefits of standardization is that it can assist all
businesses in identifying their own vital practices that can boost profits.

Disadvantages:

- Most likely, the company discovers certain outputs that need to be changed and
developed for the sake of the company's overall growth during the benchmarking
process. As a result, the organization must look at matters that will maximize
their competitiveness while also increasing customer loyalty.

- Most businesses believe that benchmarking will help them boost their company's
status, as it has with those who have achieved success. However, most

47
businesses overlook the fact that those who have risen to the top have done so
through hard work.

48
 CHAPTER V

RECOMMENDATION

Tropical Hut is a small fast food restaurant chain with a few locations in the
Philippines. Tropical Hut is a restaurant that is open 24 hours a day and serves
breakfast, lunch, and dinner. Salads, pastas, rice meals, burgers, sandwiches, and fries
are just a few of the options. They also serve coffee and sodas, as well as iconic Filipino
desserts.

We highly recommend alternative courses of action ACA #2 S3T2T3. Invest

more on adding products and utilities that would make your brand soar again. For this
strategy, we want to target the millennials and the gen z, to introduce them the products
of Tropical hut which most of them didn’t have the chance to try at least one of its
product.

1. Additional Product/ Menu or Alternative Menu

As time passed by, Generation changes so fast and most of the people are
exposed to technology even the older one. The food preferences of this Generation is
aligned to what are the trends on what happening to the surroundings. Tropical Hut is
one of the old Fast-food that is still operates. Because of the trends today, Most of the
millennial or even the Gen Z prefer to try foods that is belongs to trend, Tropical should
also level their product but not totally change the menu, they can join the idea of other
Fast-food wherein they still promote their products but with the twist of other specialties.
These idea will caught the attention of the customer by trying your new product.

2. Acknowledging Current Situation and Business Capabilities.

The Tropical Hut should acknowledge its present condition. They should accept
defeat from its significant rivals, by then they will additionally comprehend what actually
the issue is thus the organization could address it. Studies and promoting plans are
everywhere on the web. The advocates have reasoned that this organization merits a
shot. This organization has been existing for the greater part 10 years, it has assembled
a ton of associations with its clients and to examine the progressions of the market or its

49
objective buyers ought to be finished. The advocates comprehend that the organization
is taking-care its pioneer title in the business yet the organization ought to likewise
consider that the market is developing. Things change and to improve and to move
along with these progressions.

50
 CHAPTER VI

PLAN OF ACTION

1. Acknowledging Current Situation and Business Capabilities.

The Tropical Hut should acknowledge its present condition. They should accept
defeat from its significant rivals, by then they will additionally comprehend what actually
the issue is thus the organization could address it. Studies and promoting plans are
everywhere on the web. The advocates have reasoned that this organization merits a
shot. This organization has been existing for the greater part 10 years, it has assembled
a ton of associations with its clients and to examine the progressions of the market or its
objective buyers ought to be finished. The advocates comprehend that the organization
is taking-care its pioneer title in the business yet the organization ought to likewise
consider that the market is developing. Things change and to improve and to move
along with these progressions.

2. Additional product

The tropical hut should consider the korean wave and make it as an opportunity
to create a k-products since most of the people in this generation is into korean culture
when it comes to movies especially to their food. Tropical Hut must add Korean nuggets
and Korean burger to their menu like McDonald’s launched their K-Burger and its
become an advantage to their business as younger generation loves Kpop/Kdrama
inspired meal.
3. Improvement in Interior Design

As what the researchers idea in suggesting the number 1 recommendation,

Because of the influence of Social Media to people preferences and choices, People
tend to go to places that has a pleasing atmosphere that is updated to the trends.
Tropical should level their interior to what is not typical to the customers point of view.
One of the factor in choosing fast-food chain is the appearance of the store. Tropical
Hut should improve their interior design to more classic and refreshing to the eyes of the
new and loyal customer so that they have the idea that tropical hut really trying their
best to offer a classy fast food chain. One example of this is the McDonald’s Branch in

51
 Tagaytay where in people really stop by because of the quality of design that is
appealing for the customer.
4. Budget needed to accomplish the plan

To improve the interior design of Tropical Hut it may cost 50,000 pesos to
100,000 pesos per branch to achieve the trendy and classic style that the target market
would like. The budget for Product Development is around 300,000 up to 500,000 so
that we can offer a new product to stand out in the market.
5. More promotion for the business

1. Thru Flyers- Flyers is one of the strategic management used by the businesses to
attract customers, Tropical Hut should give every customers a flyers and even people
outside the store.
2. Thru Social Media- This platform is a big platform for business, It allows people to
communicate and it reach all people, Tropical Hut can also have advertisements thru
social medias especially that all generations is exposed to social media.
3. Thru Loyal Customers- Loyal customer word of mouth is very powerful, it influenced
choices of other people to try or not try the product. Providing Excellent Customer
Service must be a top priority for the business.
6. Promoting their advantages and change it as opportunities.

Tropical Hut is a fast-food chain that has a Grocery store beside their stores,
Tropical Hut should use the idea of their stores in promoting the fast-food chain itself to
the customers, Tropical should know their strengths and advantages and make that
factor to build a new opportunities for the business.

7. Do not rush the success, maintain the brand/uniqueness of the store.

Most of the businesses mistake is aiming for a bigger success one at a time, do not
rush the success nor depend procedure of the business on the things that other
business succeed because that procedure is not suitable for all business, even if you
want to join the trends the business should always check the plan according to business
capabilities. And also, maintain the uniqueness or brand of the business so that people
become more familiar to the business brand.

52