Jamocha Joes Muddy Water Caf

Final Report

Carl Carruthers Chase Vaughan Anna Henson Kelsey Madill

November 12, 2013

Dr. Randy Evans

MGT 3150: 02

Mission Statement: At Jamocha Joes Muddy Water Caf, our mission is to serve quality coffee at an affordable price for the residents and visitors of the greater College Town area. Vision Statement: At Jamocha Joes we strive toward excellence in every facet of our cafe. Our goal is to have a suitable and enhancing workplace for locals as well as a comfortable environment for people to unwind after a days work. We want to integrate our caf into the community as a whole by partnering and participating in local businesses. Strategy: At Jamocha Joes Muddy Water Caf, we proudly stand behind our strategy that is strongly grounded on the foundation of providing a top notch cup of coffee, exhibiting unbeatable customer service, along with administering a systematic approach to our fierce promotion and advertising plan. We believe in the idea of delivering a great product. A major facet of our organization is communicating with our customers, connecting with their personal wants and needs. Our intention is to expand our brand in a positive and profitable manner without losing sight of our original mission or vision. In the near future, we plan on becoming a community staple. So by using a differentiation strategy we can access the broad markets around us and expand our customer basis. This would allow us to attain our goal by targeting a broad market, and implementing a low cost marketing strategy to generate as much revenue as possible. As well as, keep our brand competitive in the local market. In order for Jamocha Joes Muddy Water Cafe to be successful in this venture, we have a strict game plan to allocate 2800$ a week strictly for advertising through newspapers and radio commercials, as to create the largest market of customers that we possibly can. In doing so, we believe that our plan will translate into an effective money making strategy. Our standard operating procedure includes: maintaining a large staff to help keep our operations running as smoothly as possible, by only selling coffee made from the highest quality coffee beans available, and keeping our prices extremely competitive. This way we can allocate more resources towards trying to be as efficient and inviting as possible in our day to day operations. We strive to stay on top of our resource usage to keep wasting of product to an absolute minimum not only to keep costs down, but also to just not waste period. At every point in time during the simulation, we strived to maintain a waste percentage that was less than a fifth of our total materials purchases. In the end, we did maintain that goal of keeping waste low. At first, our organization attempted to keep expenses down by keeping employee wages low. As time passed, we changed our stance and slowly began increasing wages to be above the market average. By the end of Period 13, our strategy had completely shifted towards paying our employees a wage that was way above the minimum wage, as a means to increase employee satisfaction and production. The plan for the starting pay for our managers was set at 600 a week. Our strategy was to give them a motivational raise one time and any more if necessary. We implemented this at the end of January by

giving them a raise of 100 dollars extra per week, totaling to a 700 a week manager payment. By keeping only the same two managers throughout the simulation, we figured that they would grow to become key assets of the business. This strategy proved successful and effective in terms of creating an experienced management team. Goals: Our first goal was to allocate as many resources as possible toward advertising, all-thewhile, advancing our brand name in the local area. From the start, we planned on maintaining a heavy investment into radio and media advertisement, to draw a large concentration of customers in at the beginning of our business life. In addition, our initial goal was to implement a relentless advertising campaign that would kick-start the life of our small business. All of which, would create the all-encompassing business strategy that would lead us to success. Our second goal was to conduct a strong marketing initiative to selling our products. We choose to put a major emphasis on marketing our products to suit the needs of the local customer basis. Some areas of great consideration concerning marketing include: having an above average coffee quality, exceptional customer service, and competitive prices. We differentiated our products by introducing variety and options that are available to the customer, thereby, giving them more power in choosing. Our third goal was to increase our number of cups sold by having a larger than average number or servers on staff. We plan for the number of employees to grow at the same rate the business grows, and we can do so by hiring new servers at a constant rate. This way, even when servers quit, we just replace and hire even more. Keeping the number of cups sold steadily rising because we would have more servers on staff to make coffee. The goal is to eventually have more servers on staff a day, that way more hands can sell coffee per day; and because of the steady increase in the business capital overtime this goal can be executed efficiently. A key factor that led to our success was the fact that when needed, we shifted our marketing strategy after making a few critical mistakes. We first advertised that we, as a brand, only used free trade coffee beans in our coffee. When in fact we did not, we accidentally used the mid-range coffee beans. This was a mistake and when it came back to haunt us, we felt the repercussions in sales and ratings. We as a group felt more inclined toward changing our marketing strategy slightly, because of the negative effects our decision caused to our strategy and the way it would reflect our future business plan. We made the executive decision to alter our plan from then on out. Initially, we began this simulation with a competitive strategy that would implement differentiation to set us apart and gain us revenue. We purchased an oven to allow us to produce baked goods, which would make us a more attractive brand as a whole, as well as, allow for a more fulfilling dining experience. Purchasing the oven affected our ambience in a positive way and increased our customer satisfaction significantly. It also increased our revenue almost immediately and paid itself off in less than 2 periods. Another example of our brand attempting to exhibit differentiation in our business plan was when we as a group were presented with the opportunity to not only have just medium cups, but also large and small as well. As we did not realize initially that the decision to have large,

small and medium was mandatory; so when we chose to not buy cups for the sizes we didnt desire to sell, we felt the repercussions in our sales and revenues. We therefor bought cups the following period and reduced our prices significantly to help cushion the blunder. This led into our decision to change our marketing strategy and business plan as well. A decision, that was to an extent a bittersweet learning experience, that in the end gave us a lot of useful knowledge about how to operate; was an incident when we didnt speak up for our best server when she was sexually harassed while on the clock. We made the managerial decision to not ask the customer to leave the restaurant because he was a regular and we felt it would negatively affect our Customer Satisfaction Rating; which at the time we were trying to improve. This decision was a mistake because we in turn lost our best server. The lesson learned though is worth the effects of the mistake, because we now know to stand by our employees or it literally hurt ones sales significantly. We increased the other employees pay after this incident and put a significant amount of focus on improving employee relations with our brand; by helping fulfill their needs, so they can help us execute ours more effectively. After assessing our situation, and considering the previous factors and their effects on our revenues, we decided to switch to a low-cost marketing strategy that would still focus on the broadest market attainable. To remain competitive, we needed an edge to attract new customers and maintain our existing customer base. We did so by adjusting our prices significantly. All of our prices at the end of March were almost a dollar less than the original numbers we set at the beginning of Period 1. We also gave out two for one coupon in our newspaper fliers, which was part of our advertising strategy; which we also enhanced in an effort to help salvage our customer satisfaction rating. Management (Servers and Wages): Our Caf: Managers: 2 @ $600/week (The end of January) 2 @ $700/week (The end of March) Servers: 17 @ $8.50/ hour (The end of January) 28 @ $8.75/hour (The end of March) Market Average: (beginning of January) Server Pay: $8.63/hour Number of Servers: 11.11 Manager Pay: $600.56/Week Market Average Turnover Rate: 18% Market Average: (the end of March) Server Pay: $10.19/hour Number of Servers: 30.11 Managers Pay: $734.67/ week Market Average Turnover Rate: 9.6%

Marketing (Price and Advertising): [Year to Date] Our Caf: Coffee $2.30 /small cup $2.70 /medium cup $2.95/ large cup $2.00/ Baked goods Market Average: $2.78/ Average Cup Sold Advertising: $400/day, $2800/ week Special Decisions and Consequences: Period 0: We purchased insurance during this first period. This positively affected our organization because when an incident occurred and we needed the insurance, we had it covered and it saved our caf a significant amount of money. Period 1: We decided to use survey forms as a medium to receive customer feedback. This positively affected us because from that point on, and until the end of the simulation, we received constructive feedback that allowed us to adjust to all the different situations we ran into. We benefitted during both positive situations and as well the negative ones. Period 2: We decided to train our staff. This affected us positively because from that point on, all of our new hired employees became more efficient; and when we hired several servers at a time, our average cups sold per employee did not ever significantly change. It allowed us also to develop an efficient and effective team. Period 3: We decided to purchase an oven, so that we could independently diversity the products we offer. This ended up being an extremely positive move on our part and really helped increase our ambience, as well as, our customer satisfaction rating being raised significantly. Period 4: We decided to start a free-trade coffee advertising campaign. At the time we were selling mid-range beans, in an attempt to make more in profit, per cup of coffee. This at first affected us in a positive way, but what we did not realize was what would happen when we were caught lying. When we were caught, it negatively impacted our organization in sales and customer satisfaction. This was a major mistake on our part. Period 5: We decided to purchase the green upgrade package. This was a positive decision on our part. It basically just updated our existing green setup and led to an increase in ambience and customer satisfaction. Also, it allowed for our organization to not need any more upgrades until the end of the simulation, which positively affected our revenue later in the simulation. Period 6: We decided in this period to stick to our original layout and stay completely green in ascetics. We felt this really held true to our original business plan, as well as, the feel we have constantly tried to portray in our organization. This positively affected us because we kept our original customer base satisfied with the ambience they had experienced upon first trying our brand, leading to a more genuine feel all around.

Period 7: In this period we decided to accept a live radio show to give us a new advertising medium, as well as, more positive publicity. This would have been much more effective, if we had not on this same period been caught lying, about what type of coffee bean we sold. We were not affected very much this period by this decision, due to the repercussions of a previous decision that turned out to display negative consequences. Had that not happened, it would have shown a lot of change in our customer satisfaction rating. Period 8: During this period, we were confronted with a situation in which we were forced to deal with a problematic employee. We decided that it was in our best interest to let this employee go before they caused any more problems. We felt their previous actions warranted such a decision, and we stand by a zero tolerance policy from here on out. We feel this is a critical element to our plans for expansion and the continuation of our brand. This positively affected us, because the other employees were satisfied with our decision. Which at this time in the simulation, we had not put nearly enough emphasis on. This decision also showed us how well making our employees happy could increase efficiency and reduce long lines, as well as, increases customer satisfaction through employee-guest interactions with content servers. Period 9: In this period we made the conscious decision to buy a coffee roaster. This purchase was an extremely beneficial decision. It not only increased our customer satisfaction rating, but also increased the amount of coffee we sold per employee per day; however, to an extent this helped reprimand our mistake previously about when we were not honest about the quality of coffee we sold. It showed our customers that after that incident we in fact did switch to the advertised coffee and helped get the word out about it increasing sales. Period 10: In this period we decided to introduce a system of free Wi-Fi at our own cost for $500, to hopefully further increase customer satisfaction, ambience and hopefully give us an in on a new tech-savvy market. This was a positive decision on our part but it did not affect us in any ultra-significant way, it just caused us to keep on our path of continuous growth. Also it helped expand our target market as we had planned. Period 11: This period was another one in which we struggled to make the right decision. We were confronted with a situation, in which a regular displayed several cases of unwanted sexual advances towards our best server. In an attempt to not hurt our customer satisfaction rating we chose not to ask the customer to leave and never come back. We decided that it was best to tell the server to dress more appropriately and to keep serving him. She ended up quitting because of this. This decision negatively impacted us in sales, after losing our best server, and impacted the happiness of our remaining employees. Period 12: In this period we were given an opportunity to switch suppliers of our beans, to in turn receive a $100 check in return. We decided to remain loyal and do the ethically correct thing to do for a change. This affected us really in no way, besides making our supplier happy. We felt that a risk such as switching your supplier wasnt worth $100, when our organization was making thousands of dollars a day. Period 13: In this period we were yet again confronted with the previous opportunity to switch suppliers for a small amount of money. We chose once again against this because of the uneven returns based on what we viewed at potential risk. This also had little to no effect on our sales or ratings. It just kept our supplier happy and led to no negative consequences.

Dear future managers, Currently, Jamocha Joes Muddy Water Cafe is running great! As of right now, we have two mangers and 30 servers, which is a total of thirty two employees. Our current server wages are set at $10.50 an hour, and the managers are earning $700 a week. The caf is proving to be an efficient business with satisfied customers and happy employees. We are proud to say that we have officially become a community staple in the College Town area. Operating a small business can be tricky, but there are always ways to improve a business growth to help it become more successful. A key factor that can help a small business immensely is to maintain and follow through with an effective business strategy. By following a specific strategy throughout, we were able to grow in every facet of our operations and gain the momentum needed for success. One issue that we faced at first was the fact that we had a great deal of trouble with keeping our employees satisfied. The servers always seemed to be overworked or underpaid. Our solution was an attempt to balance our employees satisfaction with the customer satisfaction as best we could. Raising our servers pay was deemed the best way to solve this problem; because when the employees are happy they give much better service, which in turn, makes the customers happier. The most important issue that we faced, however, was sustaining a positive perspective and view of our caf from the vantage point of our customers. It is absolutely crucial to create and hold a position that interest and intrigues the potential customer base. Our caf began with the concept of distributing high quality coffee to a broad market; and to diversify as much as possible, when the opportunity arose. This model seemed to work well at first, yet problems began to appear with our customer satisfaction over time. The issue that immerged was caused by a mistake we made in choosing our coffee grade. The problem was that we mistakenly choose mid-grade coffee beans instead of high grade beans, which upset our customers greatly, due to the fact that we had claimed to have the highest quality free-trade cup of coffee around. This major mistake created a negative view towards our caf and altered our current customers perspective about us. This was an intense setback for our business and should have been avoided, so we would advise the incoming student management team to be cautious and tedious when making decisions. As we look into the future, we at Jamocha Joes are striving to reach the ideals of our vision and plan. While we continue to venture towards excellence, the caf will continue to be a comfortable workplace for locals to relax and work in peace. Very soon, we hope to partner with other local businesses to achieve a collective participation that will strengthen and amplify the economy in College Town. We believe that, in doing so; our caf will positively affect everyone and everything in our local area.

Sincerely, Jamocha Joes Muddy Water Caf management team