Analysis of W17 Cafe in Cape Town, South Africa.

1. MAAN &
Associates
Direction. Innovation. Solution.

2. Who We Are
Mohammad Malik
Rising Junior at UVA
B.A. Economics
Alvaro Perez
Rising Junior at UMich
B.S. Industrial Operations
Engineering
Ahmed Syed
Rising Junior at Yale
B.A. Economics
Michael Nguyen
Rising Senior at Queen’s
B.S. Life Science
2

3. Agenda
Introduction
Current Strategy
Recommendations
Conclusion
Appendix
3

4. 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

5. 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

6. 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

7. Variety
Uniformity
Cheap
Expensive
5+ Direct and Indirect competitors in walking distance offering
comparable goods makes the market highly competitive and mature
7

8. Workshop 17 Café Current Strategy
8

9. 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.
Scope
Competitive Advantage
Cost Differentiation
Narrow
Broad
Cost
Leadership
Cost
Focus
Differentiation
Differentiation
Focus
Drinks
+
Food Food

10. 26%
15%
22%
11%
1%
2%
52%
77% 65%
11%
7%
11%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 2 3
Breakfast Extra Lunch Snack
% of Total Food Revenue % Revenue from Top 10 Food Items
Food 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

11. Buyer power substantially high; W17 Café should be more customer-centric
Location
Similarity of
Customers
Seasonality
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

12. Recommendations - Agenda
1. Brand Management
2. Operational Efficiencies
3. Loyalty Program
12

13.  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

14. 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
Profitability
HighLow
NumberSold
Horse
Dog
Star
Puzzle
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%

15. 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

16. 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
18893
9200
2500
3285
1408
1250
1250
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
POS Printer Paper Ink Refill Replacement Depreciation End
Annual Should-Cost Model (Printer)

17. 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
0
200
400
600
800
1000
1200
1400
1600
1800
2000
4am
5am
6am
7am
8am
9am
10am
11am
12pm
1pm
2pm
3pm
4pm
5pm
6pm
7pm
8pm
9pm
10pm
11pm
NumberofSales
Time of the Day
Sales per hour
0
100
200
300
400
8/1/15
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1/6/16
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1/15/16
1/20/16
1/25/16
1/29/16
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2/11/16
2/16/16
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2/25/16
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3/29/16
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4/21/16
4/25/16
4/30/16
5/6/16
5/11/16
5/16/16
5/20/16
5/25/16
5/30/16
2015-2016 YTD Trends

18. 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.

19. 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

20. 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
65250
45000
18000
2250
0
10000
20000
30000
40000
50000
60000
70000
Mobile Application
Development
Maintenance Database Final Costs
Should Cost Model (Mobile Application)

21. A points system would allow for growth in all three major loyalty program
customer divisions – Active, Moderate, and Inactive users
21
- R79.8
+ R40.2
314.8 R
+ R120
0
50
100
150
200
250
300
350
400
450
500
Revenue Before Loyalty
Program
Revenue After Loyalty Program
Implementation
Point System Costs Profit per Customer
Profit per Customer from Point System Implementation
R 40.2 x
90 Customers/week
R 3,618 / Week
Profit

22. Conclusions
22

23. 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

24. 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

25. Appendix
25

26. 1. Full Menu Breakdown
Snacks Extra
Muffin Bacon
Slice Cake Avocado
Pastries - Flavoured 1kg Deluxe Beans
Special Coffee Pastry Extra Chicken
Pain Chocolate Mushrooms
Homemade Granola Tomato Chopped
Brownies Feta
Date Balls Cheddar Cheese
Spinach Extra Avo
BreadButter Pudding Fruit Individual
Bacon & Egg Sandwich Beef Burger
Muesli Yog/fruit S/Chilli Wrap
Fr/Eggs B/Chse/Avo Levant Wrap
P/eggs Tomato Chicken Kebabs
P/eggs Bacon Caesar Salad
Omelette - 3eggs Pork Sandwich
Scrambled Bacon Wrap Grilled/Veg
Croissant Large Mexican Beef Wrap
French Toast Chicken Wrap
Fr/Eggs Bacon cheese Asian Stirfry
Cinnamon Oats Sandwich Tuna/Mayo
Croissant - Bacon Egg Prego Break/Wrap
Croissant Bacon Egg Ciabatta H/Chse
Eggs on Rye Quiche of the day
Eggs Spin/Tom/Mush Butternut Wrap
Croissant Chefs Special
Breakfast Lunch
26

27. 45%
52%
3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
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

28. 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

29. Chef Waiter Chef Waiter
8,000.00$ 31,500.00$ 7,135.14$ 23,670.37$
Total
8,694.49$
104,333.93$
Savings total a month
Saving total a year
39,500.00$ 30,805.51$
Downsize and Close Saturdays
If downsize and close SaturdayPresent wages per month
Chef Waiter Chef Waiter
8,000.00R 31,500.00R 8,000.00R 24,759.26R
Total
Savings total a month 6,740.74R
Savings total a year 80,888.89R
Downsize after 1 (10 employees 7-1, 6 employees 2-5)
39,500.00R 32,759.26R
Right now (1 chef, 3 cooks, 6 waiters)
Downsize
Chef Waiter Chef Waiter
8,000.00R 31,500.00R 7,135.14R 28,233.33R
Total
4,131.53R
49,578.38R
If closed on Saturday
Close Sat
39,500.00R 35,368.47R
Savings total a year
Savings total a month
Present wages per month
Downsize and Close on Saturdays considering Chef’s wage to be
R 8000/month and waiters/cooks R 3500/month
29

30. 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

31. 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 menu
Determine the costs of every component for
every item
2. Categorize
Choose 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
Profitability
HighLow
NumberSold
Horse
Dog
Star
Puzzle
Menu Item Matrix

32. 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
Differentiation
Cost
leadership for
drinks
Focus on
coffee
Focus on
coffee
Market
location
Prime Location
Diverse Cuisine
Cheap Coffee
Focus on juice
Low 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
Efficiency
Risk & SustainabilityUsage & InnovationPrice
Approach
Source: accenture-winning-
hand.com
33

34. 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
35

36. Point System – Loyalty Program
36
Before LP
Customer type Quantity Sold - Food Quantity Sold - Drink Quantity Sold - Total Total Revenue
Active 10 7 17 156.8
Moderate 8 4 12 115
Inactive 3 2 5 43
TOTAL REVENUE 314.8
After LP
Active 4 3 24 213
Moderate 2 1 15 148
Inactive 1 0 6 56
TOTAL REVENUE 417
Amount Purchased by Customer Type - FOOD % Quantity per week Increase Quantity After
Active 35% 217 20% 260
Moderate 55% 341 15% 392
Inactive 10% 62 10% 68
Amount Purchased by Customer Type - DRINK % Quantity
Active 35% 151 20% 182
Moderate 55% 238 15% 273
Inactive 10% 43 10% 48
Growth from LP
Active 40%
Moderate 25%
Inactive 15%
Customers/Week Dishes Purchased / Week
Active 25% 23 10
Moderate 50% 45 8
Inactive 25% 22 3
Total 100% 90
Customers/Week Dishes Purchased / Week
Active 25% 23 7
Moderate 50% 45 5
Inactive 25% 22 2
Total 100% 90
Points
Active 754
Moderate 568
Inactive 223
1545
RAND VALUE 61.8
102
COGS Category Quantity Quantity / Day Quantity / Week
Food 80%Drink 30974 124 619
Drinks 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
37
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