Cafe X Strategy
PROJECT OVERVIEW
SKILLS
Data Analysis
Operations
Marketing Strategy
ROLE
1 of 4 consultants
TIMELINE
2 Weeks
(June 2016)
CLIENT AND CHALLENGE
Cafe X (name redacted) located in Cape Town, South Africa had been suffering from low profits and operational problems. My team analyzed thousands of historical sales data to identify the root causes and propose marketing and operational strategies to management. We projected a 10% overall increase in revenue.
Data Analysis
We evaluated the potential of each type of product to see how they align with our end vision and compare them in terms of their current revenue contribution, as represented by the size of the bubble.
While coffee contributes the most to the total revenue currently at 34%, there is not much room for growth as customers typically purchase a maximum of 1-2 coffees per day.
After analyzing 45,000+ lines of historical sales data from the cafe, we found that the top 15 food items make up almost 50% of the entire food revenue stream.
In addition to analyzing sales data, we conducted a customer survey to understand their current perception of the cafe's food and service.
Key findings:
Customers were satisfied with the food quality, but were not happy about the long wait times.
Customers are not particularly concerned about the cafe’s prices. We found that the cafe’s prices were slightly below that of nearby competitors.
The typical cafe X customer worked in offices near the cafe, and their ranking of attributes from most important to least important were: food quality, convenience, food variety, wait times, service quality, and price.
Implementation
We presented 4 stages for improving revenues to management. Phases I and II focused on addressing problems with long wait times, while phases III and IV focused on increasing revenue per customer.
Phase I: Adjust product mix by focusing on top performing foods and sell pre-made food to streamline operations.
Phase II: Implement a pre-ordering system to cut down on long wait times. We projected wait times to decrease by 25%.
Phase III: By graphing revenue by hour, we identified a discounting strategy when bundling different products and projected a 10% revenue increase.
Phase IV: Create a loyalty program to increase customer retention by offering OPEN card, which would track customer spending patterns and allow management to segment customer groups for better promotions.
RESULTS
My strategy consulting team presented the findings and strategies to management. If implemented altogether, the cafe could expect a 10% increase in overall revenue. The project was a personally rewarding experience, as we got to uncover the story behind the sales data and think of creative strategies to improve the quality and service of the Cape Town cafe.