The W17 Café currently caters to business clientele but is looking to broaden its appeal and increase profits. It faces challenges including attracting more tourists to W17 and optimizing its large menu. Recommendations include forming strategic partnerships with W17 vendors to attract more tourists, increasing coffee prices while still being the cheapest option, and streamlining the large menu to improve efficiency. Implementing these tactics could increase revenue by over 10% and drink profits by 84 items while improving the customer experience.

1. Workshop 17 Capstone
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2. Red Onion Consulting
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2Red Onion Consulting iXperience - June 2016

3. Improve profitability, focus on customer
experience while maintaining core identity
Red Onion Consulting iXperience - June 2016
Current Issues and New Strategy
Tactics
Expand Customer Base
Improve Margins
Improve Product Mix
Target two new demographics: tourists and university students. Tourism will be
the main focus initially, as there is a large population of tourists who pass through
W17 each year. Strategic partnerships with W17 vendors will facilitate this.
Once the new customers have been attracted, increasing margins will ensure the
café maximizes profit potential. This will be accomplished by increasing coffee
prices by R2 and improving the supply chain for coffee beans.
To improve the customer experience for all patrons, the menu will be optimized and
redesigned to give the café an identity and make it easier for customers to read.
Product mix will be slightly changed for each season to cater to consumer tastes.
The W17 Café currently caters to business clientele, offering a place where professionals can meet and enjoy
refreshments while maintaining productivity. Looking forward, W17 may want to considering broadening its
appeal while increasing profit per item and customer satisfaction.
3
10.8%
244
84
~R100,000
Revenue Increase
Potential
Projected Drink
Profit Increase
items
items

4. Current Strategy
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5. Currently deliver high-quality experience for
working professionals
54%
Customers between
26-40 years old
85%
Customers who rate
the quality either 4
or 5
Components of Current Strategy
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Target Audience Menu Market
• Young
professionals
who work in
Waterfront,
particularly
W17
• Emphasize
productivity
(large tables,
outlets, Wi-Fi)
• “Jack of all
trades,” offers
variety to
satisfy wide
range of
people
• High quality
food and drink
items
• Creates
promotions in
form of daily
specials
• Estimated 20%
market share
relative to two
main
competitors,
Cooked and
Truth Coffee

6. Coffee is the main revenue driver
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• Drink revenue is 54.4% of total revenue
• Food revenue is 44.2% of total revenue
• Coffee revenue is 35.0% of total revenue
• Top 4 selling coffee drinks—Flat White,
Cappuccino, Latté, and Americano
• Peak business time is 11am
• Busiest day is Wednesday
Revenue by Category
DRINK
FOOD
OTHER
Early insights

7. High potential to quickly increase customer
volume
Price
Product
Place
Promotion
Competition-based, designed to be
significantly lower than competitors
Items include coffee, baked goods,
sandwiches and other breakfast/lunch items
Located on top floor of Workshop 17,
with most items prepared on site
Daily specials, advertised on chalkboard in
front of café. No additional advertisements
Possible to raise prices while still
remaining the cheapest option
Convenient location for many people
Appealing product mix for many
demographics
Increase in advertisements has high
potential to sharply increase volume of
customers
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Marketing Analysis

8. Face a key opportunity looking to the future
Current Situation:
The Workshop 17 Cafe is currently experiencing sagging sales and low profits relative to the
market potential in W17.
It has been struggling to find ways to attract more customers and improve its bottom line.
Key Question: How can Workshop 17 adapt and become more profitable?
Current
Strategy
New Strategy
Overview and
Tactical
Suggestions
Possible Risks,
Implementation
and Next Steps
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9. New Strategy Overview
and Tactical Suggestions
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10. Same core experience, focusing on the customer
and improving internal and external satisfaction
Increase W17 Profit
Improve Product Mix
Menu
Optimization/Efficiency
Temporal Analysis
Expand Customer Base
Tourists
University Students
Increase Margins
Prices
Supply Chain
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11. Large market size for coffee makes it
extremely attractive
24 million people visit the Waterfront each
year
500,000 people visit Workshop 17
375,000 people drink coffee
150,000 visit during prime
drinking time
Tourism
300 people work at W17
225 drink coffee
175 do not get coffee at home
W17 Workers
3.75 million R per year
1.2 million R per year
4.95 million R total
Assumptions: 75% of people drink coffee, prime drinking time is the morning during fall and winter, average price of a cup
of coffee is 25 R
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12. Radically rethink the customer base to take
advantage
Current Customer Base
Business
Tourism/Other Visitors
University Students
Ideal Customer Base
Business
Tourism/Other Visitors
University Students
Mature market with low
volume
• W17 has a limited number of
workers
• Captive audience, less
sensitive to price
Largely untapped market
with infinite cap
• Millions of visitors to the
Waterfront
• Fewer repeat customers
Unexplored market with
high upside
• Similar needs as business
category
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13. “Most people who shop down
here don’t even know there’s a
cafe upstairs”
-Workshop 17 Vendor
Tourists in W17 are a huge missed
opportunity
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14. Forming strategic partnerships with W17
vendors will attract tourists
500,000 Annual visitors to W17
1/3 Proportion of W17 Café’s customers who are visitors
Transactions made by visitors14,540/43,620
2.908% Conversion of Yearly W17 Visitors to Café Customers
Even a small increase in this percentage would yield a significant
increase in Café revenue and profits
Recommendation
Suggested Promotion
• In exchange for purchasing R200 worth of
goods at a vendor’s stand, the customer
receives 25% off one café item from the
following list: coffee, tea, pastries and
breakfast items.
• These are the highest margin items
• Promotion would be displayed prominently
by participating vendors, exposing passing
visitors to the café’s name and brand
• Beneficial for vendor, customer and café
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Form strategic partnerships with first floor W17 vendors
Result in increased sales for both sides
Tentative discussions met with great enthusiasm

15. Vendor partnerships show potential for a
R20,000+ profit increase
Visitor to Customer Conversion Rate
% of visitors
to customer
transaction
# of visitor
transactions
$ per visitor/
transaction
Increase in
revenue
Total Visitor
Revenue
Profit Increase
Worst Case
Baseline (current conversion)
2.908% 14,540 R31.45 R0 R457,283 R0
Most Likely
Baseline + Additional 1% conversion
@discounted rate
3.908% 19,540 1% @R19.04 +R95,200 R552,483 +R21,084
Best Case
Baseline+ Additional 2% conversion
@discounted rate
4.908% 24,540 2% @R19.04 +R190,400 R647,683 +R42,169
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16. Prices are significantly lower than
competitors, reducing profit
Recommendation
Coffee Price New Price Margin Increase
% Drink Profit
Increase
Espresso R14 R16 R2 0.2%
Americano R18 R20 R2 2.0%
Cappuccino/Flat
White
R20 R22 R2 6.6%
Café Latte R22 R24 R2 1.9%
10.8% Total Percentage Increase in Drink Profits
0
5
10
15
20
25
30
Coffee Drink Prices
by Vendor (in Rand)
Cooked
Truth
Workshop
17 Café
Assumption: Increase in prices reduces volume by 10%
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Increase prices of five main coffee sellers by R2
Still maintain café’s position as cheapest option on market

17. Faster service might encourage repeat
customers
What changes in the cafe might encourage you to visit more often?
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18. Streamlining the menu will result in faster
service
• All items contributing less than 0.25% of revenue
were cut from the menu
• This will allow for employee specialization and
leave more shelf space for high-revenue items
• Faster service will build loyalty and increase the
amount of repeat customers
• This process is backed by analytics– according to
Menu Design Depot, streamlining and
redesigning a menu boosts efficiency and can
increase profits up to 15%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1
221 Items-40%
23 items-60%
23 Items Provide a Majority of the
Revenue244
84
Number of items that have been
offered in the past 10 months
Number of items on streamlined menu
Rationale
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19. Redesigned menu will make new
selections accessible to customers
Before After
• Difficult to read
• Plain texture
• Not eye catching
• Disorganized
• Food organized in categories to allow the
clients to have an immediate picture of what
they can order
• Highlighted items contribute most to
revenue
Current Menu
New Menu Engineering Effects
• Simplified and more enjoyable customer
experience
• Increased ordering of high revenue items
• Enhanced brand identity and thus loyalty
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20. Product Mix by Season
Optimize offerings for each season and
time
• A change in menu for the month of December to expand offerings
such as sandwiches while reducing breakfast selections
• Retain core products at all times to maintain brand loyalty while
tinkering slightly with seasonal favorites
• Expand breakfast hours to all-day for all seasons except summer
December Month with lowest number of sales
3 - 6 pm Time period with lowest revenue
Key Insights
• Percentage of people ordering sandwiches in December is
much higher than the other two months
• Revenue generated by breakfast is really low for December
• Percentage revenue by coffee remains nearly the same the
same for all 3 months
Recommendation
Case Study:
McDonalds 1.8% Percentage of sales growth beyond
predictions after adopting all-day breakfast
20Red Onion Consulting iXperience - June 2016

21. Possible Risks,
Implementation and
Next Steps
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22. Recommended tactics have increasing risk
New Customer Base
Strategy Risks
Increase Margin
Strategy Risks
Improve Product
Mix Strategy Risks
Strategy would make
café more “touristy”
and could alienate
regulars
Vendors might be quick
to dismiss partnership if
they don’t see
immediate sales growth
Increasing prices could
drive away existing
customers
Supply chain
negotiations could break
down and make café’s
relationship with supplier
worse
Cutting about 2/3 of
items could drive
away customers who
like niche products
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Risk Analysis of Cutting Menu Items
Revenue (In
Rand)
Current Revenue 1358559
Cut Items Lost Revenue (Worst case
scenario)
-144007
Projected New Revenue Under Worst Case 1214552
Revenue Decrease Percentage -10.60%

23. Next steps can be taken immediately to assess
effectiveness
•Begin recruiting vendors with whom to establish
strategic partnerships
•Begin to layout the menu to eliminate those items
that do not contribute at least .25% to revenue
•Experiment for one month with increased coffee
prices and gauge customer sensitivity
•Look into exactly what each seasonal menu might
look like
Suggested First Steps
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Key Takeaways
•Currently serves over 240 items
•Cater to young professionals at W17
•Major struggles include attracting W17
tourists and optimizing product mix
•Recommendations include forming
strategic partnerships, increasing prices
and optimizing the menu
•Should help to increase volume of
customers, increase revenue per customer
and improve customer experience

24. Appendix
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25. Workshop 17 is a premier attraction
located in Cape Town’s Waterfront area
Description
Workshop 17 provides a creative and open shared workspace that can be rented by businesses. It
provides a platform for international players in academia and businesses. Much of its clientele comes
from start-up businesses and small vendors. It is located in the V&A Waterfront area of Cape Town,
South Africa. This area as a whole is the top tourist destination in South Africa, attracting around 24
million tourists per year.
Layout
Workshop 17 is divided into two main floors. The
bottom floor is home to a variety of small shops and
businesses that cater to shoppers, especially tourists.
The second floor houses a working space for
businesses, meeting rooms, and a variety of other
business-related services.
Red Onion Consulting iXperience - June 201625
Workshop 17 is a premier attraction
located in Cape Town’s Waterfront area

26. The Workshop 17 Café provides a convenient
location for those in W17 to meet and be
productive
Customers
67%
33%
W17 CAFE CUSTOMER
BREAKDOWN
W17 Workers Visitors
Description
The Workshop 17 Cafe is located on the second floor of Workshop 17. The Café is a space for people to meet and
work, while enjoying a delicious meal and refreshments. It is equipped with ample work space, outlets and Wi-Fi.
• The Café has two main groups of
visitors: Workshop 17 workers and
visitors.
• The visitors category can be broken
down further into tourists and visitors.
• The visitors category consists of 67%
of the customers, with W17
employees constituting the other 33%.
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27. By capitalizing on its existing strengths and addressing
its weaknesses, the W17 Café is equipped to exploit a
variety of opportunities
Strengths
Convenient location
Extensive menu
Wi-Fi enabled
High quality
Weaknesses
Long wait times
Confusing menu
Low margins
No advertising
Opportunities
Decrease wait times
Increase margins
Streamline menu
Captive audience in W17
Tap into W17 tourists
Threats
Many substitutes
Well-known competitors
Positive Negative
Internal
External
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28. Supplier Power:
Low
Threat of
new Entrants:
Medium
• Medium cost of entry
• Local street food vendor
or new franchisee of
international brand could
enter and provide
significant competition
• Many suppliers
providing similar
products
• Switching cost is low
Threat of
Substitute:
High
• Many other restaurants
in the area besides cafés
• Consumers can easily
switch to other types of
food/restaurants
Buyer
Power:
High
• Many cafés in
Waterfront area
• Low switching cost
Rivalry against
competitors: Medium
• High exit barriers due
to contracts
• Differentiation in
products is low
Key Insights
• Catering to the customer will
be extremely important
• Must provide an experience
that elevates W17 Café above
other food options in the
touristy Waterfront area
The Café industry around W17 is characterized by
high buyer power and threat of substitutes
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29. Truth Coffee poses a medium to low threat to
W17 Café due to its distant location and limited
menu
Description: A small coffee shop serving only coffee.
Best Selling Items: Flat White, Cappuccino
Location: V&A Market, near main entrance on the right side
Speed: about 1 minute/coffee
Brand Identity: Crafting their own gourmet coffee and making quality coffee drinks for coffee
lovers.
Estimated Market Share: 21%
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30. Cooked, with its unique identity and
prime location, poses a large threat to
W17 Café
Description: A shop offering coffee and a variety of breakfast and lunch items. They have their
own small seating area next to their location.
Location: Workshop 17, first floor near the entrance
Best Selling Items: Flat white, cappuccino, bacon, egg, and cheese sandwich, grilled chicken
pasta
Speed: 3-4 minutes/coffee
Brand Identity: Serving quality food and beverage to both people who work in the Waterfront-
area as well as out-of-town guests.
Estimated Market Share: 62%
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31. Cooked and W17 Café occupy similar spaces in the
minds of consumers, making them close competitors
Speed (Slow)
Speed (Fast)
Differentiation
(High)
Differentiation
(Low)
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32. Aggressively target student
demographic to expand customer base
Workshop 17 University
Crossover appeal between
businesspeople and students
• Wi-Fi enabled
• Meeting spaces
• Outlets
• Food and drink
• Ample desk space
Recommendation
• Target the UCT Graduate School of
Business (3 minute walk from W17)
• Advertise a student discount with
low-cost advertising (flyers and
posters)
• Discount would match the tourism
discount previously discussed
Four universities within 2.5 miles of W17
UCT Grad School of Business
~1000
Number of students
who attend UCT Grad
School of Business
25,000
Number of students
who attend UCT
32Red Onion Consulting iXperience - June 2016

33. Reimagining the supply chain for coffee
beans will significantly reduce costs
HighLow
High
Low
Business Criticality
Market
Complexity
Global Sourcing
Leverage global and local suppliers to find the cheapest
suppliers—no matter where they are.
Leverage Buying Consortia
Partner with other local coffee shops to increase size of
coffee bean orders and receive more favorable terms
from suppliers.
Consumption Policy Creation
Assign managers responsible for establishing
consumption policies related to usage and spend
management.
W17 Café
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34. Setting KPI’s critical to adhering to
recommendations in a timely manner
Key KPI’s
Establish strategic partnerships with at least 50 small W17 vendors within 6 months
Within 1 year, increase customer conversion percentage by 0.5% through these strategic partnerships
Decrease wait times by an average of 30 seconds within 3 months
Increase customer satisfaction with the wait times by 10%, as measured by a consumer survey, within 6 months
Why KPI’s?
KPI’s will ensure that the W17 Café makes measurable progress towards
implementing each tactic. This will be critical to overall success of the strategy and
thus profit increase.
34Red Onion Consulting iXperience - June 2016