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Creative Shock'20 Case, First Round

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Creative Shock'20 Case, First Round

  1. 1. Finding harmony through food Creative Shock’20 Preliminary Case Study
  2. 2. 2 | Business overview • “Green Harmony” is a healthy lifestyle restaurant/salad bar. The business not only prepares and delivers high quality, delicious food, but also helps to reintegrate socially excluded groups back into society. • The social enterprise team focuses on reintegration of young drug and alcohol addicts, as well as ex-convicts by using a “work rehabilitation” programme. For a six-month period participants of the programme can develop work skills as waiters, cooks or bartenders while also continuing with their therapy and/or education. Participants finish the programme with a qualification and an employer’s reference that should help them to find a permanent job. • “Green Harmony” aims to change society’s perception towards former drug users and ex-convicts and is organising many different social events related to this topic.
  3. 3. 3 | Overview of “Green Harmony” social model • Even after successful rehabilitation programmes, many former drug addicts and ex- convicts often take up their old habits. This is mainly driven by the absence of proper professional work skills, a patchy work history and a negative attitude of employers and society in general towards this social group. • During rehabilitation programmes professional help is usually provided in a protected environment. After finishing these programmes many participants need to face every- day problems alone without any support; this is also a key factor why they tend to start using drugs or commit crimes again. • Relapse is a major problem; therefore, reintegration of ex-addicts and former convicts into society involves a complicated mix of psychological coaching and training. • “Green Harmony” seeks to find solutions to all of these problems by: − Providing training and employment to the participants − Providing professional rehabilitation in a non-protected environment (free consultations by social workers and psychologists) − Providing personal development and coaching to build self-confidence − Providing required financial support (salary, public transport tickets, etc.) − Supporting and mediating in finding further jobs • “Green Harmony” approach • Social problem
  4. 4. 4 | “Green Harmony” restaurant concept was revamped to build more sustainable business model • In 2019 “Green Harmony” was not able to receive enough funding from social and governmental institutions to remain profitable and maintain rehabilitation programme at the same scale. • The management team of “Green Harmony” where evaluating different ways how to create a fully sustainable social business and be less dependent on donations and government funding. They came up with a new restaurant concept, which is more focused on family dining and would have longer work hours (previously restaurant were open from 9am to 3pm on workdays and Saturday). This way they were aiming to attract larger groups of visitors to the restaurant. • They also expanded restaurant menu to 52 salad dishes and added 8 types of healthy drinks and green cocktails. To put the focus on their new dishes company also removed daily lunch combo from the menu. • Company revamped its restaurant in few months and re-opened in March of 2020. The new concept was a success as number of restaurant visitors grew by ~75%, while restaurant revenue by almost 20%. Also, restaurant busiest time shifted from lunchtime during workdays to evenings and weekends. • However, this revenue increase is not enough to cover all potential company losses in 2020 (and potentially in 2021 as well), as only 100 thous. Eur were raised for 2020 period from donations & government funds, while costs remained at the same level as in 2019. 2019 3-09 2020 3-09 154.148 87.510 +76% Number of restaurant visitors, 2019 03-09 vs 2020 03-09 477.989 2019 3-09 2020 3-09 568.075 +19% Revenue from restaurant activities, 2019 03-09 vs 2020 03-09 EUR
  5. 5. 5 | Although income from revenue business continued to grow in 2019, company reported its first annual loss Revenue breakdown, 2016-2019 Thous. EUR EBITDA and EBITDA margin, 2016-2019 Thous. EUR 2018 761,2 200,0 629,9 2019 771,4 1.100,5 Revenue from sold goods/ services 2020 (Forecast) Donations, funding 504,9 125,0 2017 376,0 2016 670,6 340,0 724,5 1.010,6 961,2 871,4 100,0 +8% 2016 2,5% 2019 4,1% -12,0% 4,3% 2017 2018 -5,6% 2020 16 42 47 -115 -49 EBITDA Margin, % Forecast was done for 10 months (2020.03 -2020.12) period when restaurant is fully operational. All restaurant revamp costs were excluded from estimation to make it more comparable with previous years.
  6. 6. 6 | Your Task Your Task • “Green Harmony” Board of Directors is planning to meet and discuss restaurant performance after the re-launch. • BOD of the company hired your consultant team to help management team to analyze restaurant results from the strategic perspective and provide recommendations how to improve restaurant results. • After discussion with the management team you agreed to focus on following topics: Situation • Provide your hypothesis why restaurant revenue didn’t grow as fast as number of visitors after the re-launch. Which revenue drivers/ KPIs indicate these reasons or prove your hypothesis (all necessary information required to answer this question is provided in the back up)? • Based on your findings, provide your recommendations what actions the management team of “Green Harmony” could take to increase restaurant revenue. 1 2
  7. 7. 7 | BACK UP
  8. 8. 8 | Overview of Menu changes Breakfast Lunch Main Menu Menu type Before re-launch After re-launch • Breakfast menu was limited only to few dishes. It was available only on Saturdays • “Breakfast menu remained the same, however due to longer work hours became • During lunchtime “Green Harmony” offered a special lunch combo (usually consisting of a soup and the main salad dish) for an affordable price • It is one of the busiest times of the day, as many people from business centres nearby are having lunch • Lunch combo was removed from the menu in order to put more emphasis on the dishes in the revamped Main menu • Restaurant offers only 8 salad dishes and 2 types of desserts in their main menu • Only few customers were selecting dishes from the main menu, as the daily lunch combo were always the most preferred option due to its price • Main menu was expanded to 52 salad dishes. 8 types of healthy drinks and green cocktails were added to the menu as well. Dessert section were expanded to 4 dishes as well. Note: Company does not sell any alcohol or tobacco products. Even though selling alcohol and tobacco items would help to improve revenue and profit, social responsibility and the well-being of employees are and will be the main priority for the „Green Harmony“ management.
  9. 9. 9 | Monthly restaurant KPIs 2019 05 10.644 11.292 2019 04 26.056 24.664 2019 01 2019 07 2019 02 2019 03 14.932 2019 06 11.264 2020 07 2019 08 2019 09 10.218 2019 10 2019 11 2020 01 2019 12 2020 08 2020 02 2020 03 22.277 2020 04 2020 05 21.481 2020 06 2020 09 9.522 13.802 12.540 11.066 12.436 11.190 19.890 20.288 19.492 11.442 Number of visitors 2019.01-2020.09 Number of receipts 2019.01-2020.09 Monthly revenue (restaurant only) 2019.01-2020.09, EUR 2019 09 2019 05 2019 06 2020 04 2019 03 2019 04 2019 01 2019 07 2019 02 8.304 2019 08 2019 10 8.526 2019 11 6.901 2019 12 2020 01 2020 02 7.544 2020 07 2020 03 6.140 5.848 2020 05 2020 06 2020 08 2020 09 6.491 7.833 8.655 6.724 6.959 7.602 6.667 6.491 6.842 6.932 8.481 7.140 7.348 2019 01 2019 02 2019 03 2019 04 2019 06 2019 07 2019 08 2020 07 2019 09 80.755 2019 10 2019 11 2019 12 87.218 2020 01 2020 02 2020 03 69.487 2020 04 2019 05 2020 05 2020 09 2020 06 2020 08 71.211 52.642 57.380 95.437 61.591 61.065 73.172 76.350 82.122 62.644 68.435 57.906 54.221 73.413 83.691 60.538 Number of items sold 2019.01-2020.09 2020 07 2019 08 2019 01 2019 10 2019 02 2020 05 2019 07 15.880 2019 03 14.130 2019 05 2019 06 2019 09 2019 11 2019 12 2020 01 2020 02 2020 03 2020 04 2019 04 13.504 2020 08 2020 09 12.504 19.277 14.380 18.006 19.131 16.130 14.630 13.629 16.672 14.255 13.254 17.367 21.747 18.235 22.751 18.409 2020 06 Closed for revamp
  10. 10. 10 | Daily restaurant KPIs 82 75 79 92 49 42 Tuesday Thursday Wednesday Monday Sunday Friday Saturday 49 50 49 56 24 22 Sunday Monday Tuesday Wednesday Saturday Thursday Friday 411 414 460 512 269 243 Wednesday Monday Sunday Tuesday Thursday Friday Saturday Avg. number of visitors per day Avg. number of receipts per day Avg. revenue per day, EUR Avg. number of items sold per day 98 103 108 120 59 50 Tuesday Friday Monday Sunday Saturday Thursday Wednesday 95 87 91 92 128 140 111 Saturday Tuesday Friday Monday Thursday Wednesday Sunday 39 41 36 36 41 39 37 Saturday Monday Wednesday Tuesday Thursday Sunday Friday 323 326 362 403 436 488 388 Saturday Monday Sunday Tuesday Wednesday Thursday Friday Avg. number of visitors per day Avg. number of receipts per day Avg. revenue per day, EUR Avg. number of items sold per day 91 90 95 95 95 86 86 Friday Tuesday Monday Wednesday Sunday Thursday Saturday Before re-launch After re-launch Closed
  11. 11. 11 | TOP 5 most popular “Green Harmony” menu items (based on purchase frequency) 1 2 3 4 5 • Lunch Deal • Fried chicken salad with feta cheese • Bean salad with tomatoes and paprika • Caesar salad • Hot Mexican chicken salad Dish name Price, EUR • 3.5 • 5 • 5 • 5 • 5 No. 1 2 3 4 5 • Green cocktail • Fried chicken salad with feta cheese • Strawberry cocktail • Hot Mexican chicken salad • Caesar salad Dish name Price, EUR • 3 • 5 • 5 • 3 • 5 No. Before re-launch After re-launch
  12. 12. 12 | Main definitions Visitor – person who visited the restaurant (e.g., if 3 people were seated at the same table, they would be accounted as 3 visitors) Receipt – a document acknowledging that a table/ person paid for the ordered items Item sold – dishes and drinks ordered from the menu Monthly revenue – revenue generated from restaurant activities during calendar month period

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