MAAN & Associate

sDirection. Innovation. Solution.

Who We Are

Mohammad MalikRising Junior at UVA

B.A. Economics

Alvaro PerezRising Junior at UMich

B.S. Industrial Operations Engineering

Ahmed SyedRising Junior at Yale

B.A. Economics

Michael NguyenRising Senior at Queen’s

B.S. Life Science

2

AgendaIntroductionCurrent StrategyRecommendationsConclusionAppendix

3

Methodology

4

Strategy DevelopmentCurrent State Assessment

Mission, Values and Vision

Strategic Recommendations

Performance Measures and

Targets

Scenario Analysis

Customer Insights

Strategy FormulationCustomer Analysis

Market Analysis

Operational Analysis

Processes

Sales

Execution

OUTPUTS

Quantitative Analysis

Synthesize Information

Economic Environment and Forecast

Business Constraints

Geographical Considerations

INPUTS

Executive Summary

▪High competition in mature market with 5+ Direct and Indirect competitors in walking distance offering comparable goods ▪W17 offers convenience and variety at a competitive price for its concentrated group of buyers (W17 attendees)▪With offering 151+ food products, brand identity and convenience suffer despite 60% of food revenues from top 10

options▪Buyer power is high with seasonality, substitutes, location, and regulation limiting their ability to capture a larger market

▪W17 Café has operated for just over one year with sales of R1,357,373

▪Sales are composed of drinks (45%), food (52%), and other items for attendees at Workshop 17

Status

Company

5

▪Grow organically through delivering a better customer experience and capturing more of current market▪Create a brand platform through reevaluating value proposition, brand identity, and competitive positioning ▪Decrease customer wait time 50%+ via new investments in POS and kitchen display systems▪Categorize most popular, profitable products and consolidate to save costs, drive convenience, and develop brand

identity▪Close on Saturdays and shift staffing after 2PM on business days to save on R100,000+ variable costs including wages

Recommendations

Café

Company Name Workshop 17 Cafe

Founded: 2015

Primary Discipline:Provide food, drink, and

an inclusive area for W17 members

Primary Target Market: W17 Members

Secondary Target Market: Tourists & Locals

Number of Employees on Line ~10

Total Revenue to date R 1,357,373

Client Profile

45%

52%

3%

Total Revenue to Date

Drink Food Other

6

Variety

Uniformity

Che

ap E

xpensive

5+ Direct and Indirect competitors in walking distance offering comparable goods makes the market highly

competitive and mature

7

Workshop 17 Café Current Strategy

8

W17 Café has conveniently provided a variety of options at a competitive price, however they should move towards reducing differentiation for food

9

• Cost-leadership strategy with their drinks, setting a competitive price for many of their items.

• Differentiation strategy with their food options, holding a diverse range of gourmet meals on their menu.

Scop

e

Competitive AdvantageCost Differentiation

Narrow

BroadCost

Leadership

Cost Focus

Differentiation

Differentiation Focus

Drinks + Food Food

1 2 30%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

26%15%

22%

11%

1%

2%

52%

77% 65%

11% 7% 11%

Breakfast Extra Lunch Snack

% of Total Food Revenue % Revenue from Top 10 Food ItemsFood Analysis

% of Total Food Items

58% of food revenues come from Top 10 items

A wide variety of food items create confusion for customers, increase inventory costs, and blur brand

identity.

151 items

10

Buyer power substantially high; W17 Café should be more customer-centric

Location

Similarity of

CustomersSeasonalit

y

The waterfront restricts

advertisements so the café cannot advertise

in the lower level

Usually attendees (students, business man, conference attendants)

Regulation

W17 Users

More than 30 users out of every 50 users

work or study at W17*

2nd floor location gives them less new customers

Their number of sales are directly correlated to the

business schedule

11

Recommendations - Agenda1. Brand Management2. Operational Efficiencies3. Loyalty Program

12

Reliability

Reputation Consistency

Premium Pricing

Target Frame of Reference Key Benefit Reasons to Believe

Product Key Features Audience Key Benefit

Refocusing W17 Cafe’s brand will deliver a better customer experience with improved associations and attitudes

Brand Identity

Positioning

Value Proposition

Brand Platform

Customer Loyalty

Higher Margins

Competitive Advantage

13

W17 Café Menu Revitalization will promote simplicity, convenience, and profitability.

Reduce menu items to top items which make up 59% of food sales

Develop a focused menu which reduces total inventory and creates efficiencies

Create an identity and build upon brand of convenience and quality

14

Menu Item Matrix

Horse: low profitability and high popularity

Star: high profitability and high popularity

Dog: low profitability and low popularity

Puzzle: high profitability and low popularity

Menu Item Matrix - Definitions

151 52 Food Items

Average wait time decreases 400%

Decrease order-delivery wait time by introducing Point of Sale system and Kitchen Display System.

• POS system can increase customer delivery efficiency by 25%• Bill Time System can increase customer delivery efficiency by 15%

Source: Maitred POS

Average Customer wait time for drink delivery will decrease to 1:39s

At peak hours, wait time for customer order to delivery increases relative to congestion.

POS system requires implementation of kitchen display system to mitigate “rate-limiting effect” down the order line.

Faster

Faster

Employee communication is crucial to delivering shorter wait times.

15

Replacing POS receipt printer for a Kitchen Display Screen (KDS) will improve employee communication + reduce variable costs

Annual operational costs for POS printer receipts will cost 47% more than initial kitchen display screen investment.

• Over 3 year period, total operational costs will be a total 370% more than KDS initial investment.

• Integration of POS + KDS system will improve employee communications during peak hours over till paper orders.

16

POS Printer Paper Ink Refill Replacement Depreciation End0

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

9200

2500

3285

14081250

1250

18893

Annual Should-Cost Model (Printer)

W17 Café should close on Saturday + scale back staff after 2pm to reduce variable costs.

Shifting from 9 - 5 waiters/cooks

Closing on Saturday

Both Scaling back and closing

We would have saved in the last 10 months

R 80,888.89

R 104,333.93

R 49,578.38

R 70,030.94

Savings per yearAction

17

4am6am

8am10am

12pm2pm

4pm6pm

8pm10pm

0200400600800

100012001400160018002000

Sales per hour

Time of the Day

Num

ber o

f Sal

es

42217 42227 42235 42243 42251 42259 42268 42277 42285 42293 42301 42310 42318 42326 42334 42342 42350 42374 42382 42390 42398 42406 42413 42422 42431 42439 42447 42459 42467 42475 42483 42493 42501 42509 425170

50

100

150

200

250

300

350 2015-2016 YTD Trends

Offering a loyalty system will bring brand identity, drive sales, and ultimately improve the customer experience

Source: National Restaurant Association 18

Loyalty Program

Differentiate from competitors

Increase sales averages

Increase frequency among regular customers

Encourage cross-selling

77% of NRA members said that loyalty programs helped drive business during economic downturn.

90% of NRA said loyalty programs gave them a competitive advantage.

Personalized Accounts Online Experience

Source: danielortega.com

You Can…

• Personalize your account• Check your number of points• See how many points away

you are from a reward• Take a look at the Menu• Get notifications on discounts

and offers• Pick-Up Order• Check the status of your order

Reinforce user experience and drive customer loyalty with a

personalized QR Code and Mobile Application.QR Code

• Register and get your own Code

• Point-Reward system by scanning and purchasing at the Cafe

19

Initial mobile application development are high cost but after initial development remains only maintenance costs

First year costs will be covered by implementing other recommendations already mentioned. After first year, costs will only be R 1,687.5/month to run the application.• Maintenance costs are

distributed over 12 months (R20,250)

• This mobile application will be small relative to big company loyalty applications.

20

Mobile Application Development

Maintenance Database Final Costs0

10000

20000

30000

40000

50000

60000

70000

45000

18000

2250

65250

Should Cost Model (Mobile Application)

A points system would allow for growth in all three major loyalty program customer divisions – Active, Moderate, and Inactive users

21

Revenue Before Loyalty Program

Revenue After Loyalty Program Implementation

Point System Costs Profit per Customer0

50

100

150

200

250

300

350

400

450

500

314.8 R

+ R120 - R79.8

+ R40.2

Profit per Customer from Point System Implementation

R 40.2 x 90 Customers/week

R 3,618 / Week Profit

Conclusions

22

Reducing Menu

Variability

Overestimations for reduction times through introduction of bill-time

screens

Price consideration for IntelliPOS, given that monthly rental costs could

accumulate

Underestimation for amount of future sales on Saturday

Competitors might gain advantage through being open on Saturdays

Customers may be dissatisfied with the reduction in menu options

Loss in differentiation of food items could mitigate effects of increased

specialization

Customers may not be interested in using rewards system

Time and investment required to create a user friendly app

Here are some potential risks associated with these recommendations

New KDS System

Loyalty Program

Closing on Saturday

22

Creating efficiencies and focusing on regulars will deliver a better customer experience and drive sales

24

Create brand platform

Grow Organically by cost-cutting and

refocusing

Decrease wait times via efficiency investments

Menu Engineering Close on Saturdays and scale back after

2PM

Customer Loyalty Program

2

4

6

5

3

1

Customer Experience

Appendix

25

26

1. Full Menu Breakdown

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

45%

52%

3%

Drink Food Other

3%

57%

7%

28%

5%

Alcohol Coffee Juice Other Tea

14%

53%

8%

21%

4%Total Sales Total Sales: Drinks Total Margin: Drinks*

Drinks make up nearly half of all sales with coffee as the leader in both drinks sales and margins

Drink Analysis

*Based on industry costs

27

Differentiates in the market through a focus on quality for their juices and smoothies,

Has competitive prices with W17 Café

Focused approach allows for efficient and quick service

Differentiates in the market through a focus on middle eastern cuisine

Has competitive prices with W17 Café

Has developed a brand identity

Has a customer oriented pricing strategy, with systems such as customer credit in place

The two direct competitors for W17 Café are Cooked and ESO Juice Bar, due to proximity, similarity, or a combination of both factors

28

Downsize and Close on Saturdays considering Chef’s wage to be R 8000/month and waiters/cooks R 3500/month

29

42%

50%

7%

Customer Spread (Before Implementation)

Active Moderate Inactive

42%

50%

7%

Customer Spread (Before Implementation)

Active Moderate Inactive

With Loyalty System

Base Total Orders/Week

Active 264Active 42%

Moderate 315Moderate 50%

Inactive 46Inactive 7%

Total 625

Worst Total Orders/Week

Active 288 43%

Moderate 329 50%

Inactive 46 7%

Total 663

Expected Total Orders/Week

Active 360Active 46%

Moderate 378Moderate 48%

Inactive 48Inactive 6%

Total 786

Best Total Orders/Week

Active 420 45%

Moderate 427 48%

Inactive 50 6%

Total 897

30

W17 should use menu-engineering to cut variety and focus on most profitable options.

Drivers:Simplicity, convenience, and

profitability in items

2. Categorize

3. Design and Test Prioritize enhancement opportunities based

on benefit.

3. Design & Test

1. Cost the menu

1. Cost the menuDetermine the costs of every component for

every item

2. CategorizeChoose items based on profit and popularity,

then organize into four quadrants

High

Horse: low profitability and high popularity

Star: high profitability and high popularity

Dog: low profitability and low popularity

Puzzle: high profitability and low popularity

Menu Item Matrix - Definitions

31

Menu Item Matrix

Primary Target Market

W17 Members Locals & Tourists

Locals & Tourists

Locals & Tourists

W17 Members, Tourists

Locals & Tourists

Secondary Target Market

Locals & Tourists

W17 Members W17 Members W17 Members W17 Members W17 Members

DifferentiationCost

leadership for drinks

Focus on coffee

Focus on coffee

Market location

Prime LocationDiverse CuisineCheap Coffee

Focus on juiceLow fixed cost

Americano Cost

18 R 22 R 24 R 22 R 15 R ---

Average Cost of Tea

18 R 26 R --- 25 R 15 R ---

Average Cost of Breakfast

34 R --- --- 55 R 48 R ---

Average Cost of Lunch

36 R --- --- 68 R 55 R ---

32

33

Workshop 17 Café should approach strategic sourcing through…

Market Risk Management:• Create Visibility and

annual performance of key suppliers to anticipate leading financial results and potential merger/acquisition activity.

Value Chain Integration:

• Analyze distribution scenarios with suppliers to select most effectives reducing costs, working capital and improving service.

Commoditized Cost Management:

• Partner with other buyers to combine demand on similar products in order to negotiate supplier contracts and bring costs down

Cross Functional Engagement:• Standardize

products and rationalize features and variations in order to improve purchasing effectiveness and contain cost

Process & Operational EfficiencyRisk & SustainabilityUsage & InnovationPrice

Approach

Source: accenture-winning-hand.com

Implementation of loyalty program with point system

Since 2007, IntelliPOS solutions have brought numerous benefits to customers and have been easily adapted for

any type of venue: restaurants, pubs, clubs, hotels, catering or beauty salons. 

The fastest-growing customer loyalty platform with clients such as Jamba Juice, Cold Stone Creamery, Dickey's Barbecue Pit, Burgerfi, and more (2013).

 

American Startup

Software & Technology Focused

Recognizable Clientele

Loyalty focused, customizable, data driven

Established business through Europe

Hardware Focused

Global Clients

Complete Business Management Platform

4

2

3

1

4

2

3

1

Capital Expenditure Intensive5 Labor and Oversight Intensive5

34

35

Strengths Weaknesses

Opportunities Threats

• Location drives convenience for W17 attendees

• Variety of quality options at comparable prices

• Personalized delivery service

• Operational inefficiencies• Long customer wait times• Weak brand identity

Organic growth through:• Brand Identifiably• Operational Efficiencies• Loyalty Programs

• Direct and Indirect Competitors• Dependency on Workshop 17 • Increased regulation

Threat of New Entry

Buyer Power

Rivalry Among Competitors

Threat of Substitutes

Supplier Power Industry State:

Mature

Given the organizational opportunities, inefficiencies, and mature market, W17 café should pursue an organic growth strategy

Internal

External

36

Point System – Loyalty Program Before LP Customer type Quantity Sold - Food Quantity Sold - Drink Quantity Sold - Total Total RevenueActive 10 7 17 156.8Moderate 8 4 12 115Inactive 3 2 5 43TOTAL REVENUE 314.8After LP Active 4 3 24 213Moderate 2 1 15 148Inactive 1 0 6 56TOTAL REVENUE 417

Amount Purchased by Customer Type - FOOD % Quantity per week Increase Quantity AfterActive 35% 217 20% 260Moderate 55% 341 15% 392Inactive 10% 62 10% 68 Amount Purchased by Customer Type - DRINK % Quantity Active 35% 151 20% 182Moderate 55% 238 15% 273Inactive 10% 43 10% 48

Growth from LPActive 40%Moderate 25%Inactive 15%

Customers/Week Dishes Purchased / WeekActive 25% 23 10Moderate 50% 45 8Inactive 25% 22 3Total 100% 90Customers/Week Dishes Purchased / WeekActive 25% 23 7Moderate 50% 45 5Inactive 25% 22 2Total 100% 90

PointsActive 754Moderate 568Inactive 223 1545RAND VALUE 61.8 102

COGS Category Quantity Quantity / Day Quantity / WeekFood 80%Drink 30974 124 619Drinks 50%Food 21613 86 432

KEY ASSUMPTION:

~ 90 CUSTOMERS/WEEK

http://www.socialannex.com/blog/2016/02/05/ultimate-customer-loyalty-statistics-2016/Growth From LP source:

37

Point System – Loyalty Program BEFORE LOYALTY PROGRAM AFTER LOYALTY PROGRAM

ACTIVE BUNDLE MODERATE BUNDLE ACTIVE BUNDLE MODERATE BUNDLE

FOOD PRICE REVENUE FOOD PRICE REVENUE FOOD PRICE REVENUE FOOD PRICE REVENUE

Beef Burger 60 12Beef Burger 60 12Beef Burger 60 12Beef Burger 60 12

S/Chilli Wrap 45 9S/Chilli Wrap 45 9Beef Burger 60 12S/Chilli Wrap 45 9

Levant Wrap 45 9Caesar Salad 56 11S/Chilli Wrap 45 9Caesar Salad 56 11

Caesar Salad 56 11Bacon & Egg Sandwich 49 10Levant Wrap 45 9Chicken Kebabs 63 13

Bacon & Egg Sandwich 49 10Muesli Yog/fruit 39 8Caesar Salad 56 11Bacon & Egg Sandwich 49 10

Muesli Yog/fruit 39 8P/eggs Tomato 44 9 Bacon & Egg Sandwich 49 10

P/eggs Tomato 44 9Muffin 13 3Bacon & Egg Sandwich 49 10Muesli Yog/fruit 39 8

Muffin 13 3Slice Cake 36 7Bacon & Egg Sandwich 49 10P/eggs Tomato 44 9

Slice Cake 36 7Total 68Muesli Yog/fruit 39 8Muffin 13 3

Pastries - Flavoured 17 3DRINK P/eggs Tomato 44 9Slice Cake 36 7

Total Food 81Coffee 20 10P/eggs Bacon 35 7Total 91

DRINK Coffee 20 10Muffin 13 3DRINK

Coffee 20 10Juice 20 10Slice Cake 36 7Coffee 20 10

Coffee 20 10Tea 18 9Pastries - Flavoured 17 3Coffee 20 10

Coffee 20 10Other 16 8Total Food 110Juice 20 10

Juice 20 10Total 47DRINK Juice 20 10

Juice 20 10TOTAL 115Coffee 20 10Tea 18 9

Tea 18 9INACTIVE BUNDLE Coffee 20 10Other 16 8

Tea 18 9 FOOD PRICE REVENUE Coffee 20 10Total 57

Other 16 8Beef Burger 60 12Coffee 20 10TOTAL 148

Total Drink 76Bacon & Egg Sandwich 49 10Juice 20 10INACTIVE BUNDLE

TOTAL 156.8Muffin 13 3Juice 20 10 FOOD PRICE REVENUE

Total 122 24Tea 18 9Beef Burger 60 12

DRINK Tea 18 9Chicken Kebabs 63 13

Coffee 20 10Tea 18 9Bacon & Egg Sandwich 49 10

Tea 18 9Other 16 8Muffin 13 3

Total 38 19Other 16 8Total 37

TOTAL 43Total Drink 103DRINK

TOTAL 213Coffee 20 10

Tea 18 9

Total 19

TOTAL 56