Hole in one Bagels.

Fuller, Barbara K. ; Burns, Michelle

CASE DESCRIPTION

The primary subject matter of this case concerns the purchase of an established bagel business during a period of economic recession and industry consolidation. The case focuses on the examination of financial strategies with an emphasis on cost analysis and the development of marketing strategies. The secondary issues include decisions dealing with relocation and growth. This case has a difficulty level congruent with entrepreneur majors with junior or senior status. In order for students to examine this case effectively they should have background knowledge in analyzing financial statements, and developing marketing strategy. The case is designed to be taught in one class session of approximately 1.25 hours and is expected to require four to six hours outside preparation time from the students.

CASE SYNOPSIS

In June 2002 Phillip McGuthry, a long time resident of Fort Mill, SC, purchased Hole in One Bagels, a small independent bagel shop with a great reputation in the community and a good customer base. The economic environment at the time of the purchase showed signs of weakness. In addition, the 911 terrorist attacks, and the low-carb diet trend were also somewhat worrisome. However, the bagel shop offered McGuthry a way to get out of the corporate world of advertising and step into what he thought would be a quieter more relaxed environment. He felt that with a few adjustments in the store's operation, he would make a reasonable profit. Overtime, he would learn more about the business thus increasing efficiencies and margins. Currently the only type of promotions was word of mouth. Certainly he could make improvements in the marketing area. However, after a mere five months McGuthry found that running the business was more challenging than he originally thought. Some months the business was profitable and other months cash flow was negative. He also found it necessary to hire a weekend manage so that he was not working 7 days a week. This added to his current labor expenses. McGuthry loved his new business, but was faced with some serious decisions if he is going to make the business profitable. He must either cut expenses or increase market share and customer demand. The case looks at the challenges that face McGuthry as the new owner of Hole in One Bagels. His initial objectives were to increase efficiency in operations and to retain his current customer base while attracting new customers to the shop. Decisions about location and possible expansion of the business would need to be addresses after tackling the initial operational issues.

INSTRUCTORS' NOTES

RECOMMENDATIONS FOR TEACHING

The case was placed in Fort Mill, South Carolina, which was located on the outskirts of Charlotte, North Carolina. Fort Mill was not the actual location of the business but provides an atmosphere much like the city in which the bagel shop was located. Charlotte had grown significantly with the additions of the NASCAR speedway and the Carolina Panthers NFL team. Small cities surrounding Charlotte such as Fort Mill were stable and were showing signs of growth at the time of this case, even in the aftermath of September 11, 2001. Industry, competitor, and customer information have been provided in the case to give students a feel for the type of environment that existed for Hole in One Bagels at the time McGuthry purchased the business. The case also provides information on a new industry segment that was forming in the late 1990's called the "quick casual" dining industry. Hole in One Bagels fits into this industry with an average ticket sale above those of fast food but below casual sit down dining. Several references are provided that look at the quick casual industry and its growth.

It should be noted that, the bagel industry was in its prime in the mid-90's. If students search for industry information about bagels, they will find a lot of industry information up to the mid-90's. Then in the late 90's the bagel craze seemed to end and not much was written. This may be frustrating to students; therefore, a discussion of the industry would be helpful at the time that the case is assigned. The most helpful resource dealing with current information on the bagel industry was the website for the Retail Bakery Trade Association at http://www.rbanet.org. However, since the industry figures are provided in the case for the relevant time period, most of the emphasis for class discussion should be placed on using those figures as a basis for the development of strategies for marketing, lowering expenses, growing market share, and increasing customer demand.

Students were given a good picture of McGuthry, a new entrepreneur, who purchased a business and the environment in which he found himself. The case described the competitors, the bagel industry, and the targeted customer segments. The menu, personnel policies, advertising, and financial statement are available in the figures at the end of the case. The students should be encouraged to use all of the information to evaluate the current situation and make recommendations to McGuthry. The questions below guide the student through the process of making specific marketing and financial recommendations for Hole in One Bagels. Students should be given freedom to be creative in their solutions. The suggestions given here should be used by the instructor as examples of one of many answers that could be given in this situation.

NOTE: Hole In One Bagels and the location Fort Mill, SC were both fictions. The business name was changes and the shop was placed in a small town with demographics similar to the original shop's location. Financial figures were also altered but kept proportional to the original business. This allows student to utilize the figures for financial analysis and they should be highly encouraged to do so.

QUESTIONS

1. Identify the two consumer target markets that purchased bagels at Hole in One Bagels.

The customer base of Hole in One Bagels consisted mainly of people from the age of 18-55 in the middle class income bracket and above. However, because the shop was located near a college, its target market was somewhat complicated. McGuthry focused not only on the major segment of white-collar professional including teachers, lawyers, accountants, and doctors; but also advertised to high school and college students. The students and the business community were separate target markets with different needs and wants; therefore, a distinct promotional strategy should be developed for each segment.

The student segment, made up of younger 18 to 22 year olds, was interested in a unique place to meet fellow students for coffee and a bagel. They also wanted a place to study, talk with friends, or have a quality breakfast on the run in a venue away from the cafeteria. About 20 % of Hole in One Bagels' consumer market consisted of students.

The community segment, somewhat older professionals, was made up of doctor's, attorneys, teachers and business people that stopped by on their way to work. For these customers, Hole in One Bagels provided a quick casual menu as an alternative to fast food. These consumers were interested in a fast, healthy, quality option for breakfast on the run. This part of the target market made up 80 % of Hole in One Bagels' consumer business.

2. Develop a six-month promotional campaign for Hole in One Bagels that would best target the two customer segments identified in question 1. (Note: Two different target markets require two different promotional strategies)

Two sample promotional plans are provided as a starting point for discussion. The first is for the student market and the second for the professional community market. Students may be creative in this section and develop additional ideas other than those listed below. This creativity should be encouraged. Research on the bagel customer indicated that they are looking for a fast, healthy, quality breakfast item that is made fresh from scratch. The bagel is perceived to be a luxury breakfast product therefore; the promotional campaign should reflect the quality aspects of the product.

The media vehicles (newspapers, press releases, sales promotions, and loyalty cards) shown in the above chart were suggestions for developing a promotional campaign to increase sales from the local college students. This campaign was designed to make students more aware of Hole in One Bagels and what they had to offer. The different vehicles have been spaced out over the semester at opportune time to connect with students. Keep in mine this promotional plan addresses only the students and the Fort Mill community will be addressed in the next section.

Taking into account costs and the habits of college students, advertising in the campus newspaper was a top choice. Also, posting flyers around campus buildings was inexpensive and should produce good results. Extended hours for study or a place to take a study breaks should be promoted to increase student awareness during mid-terms and finals. Also, college student would be more aware of Hole in One Bagels if it were involved in campus activities such as the opening convocation for the school year. During convocation Hole in One Bagels could give out samples of their food and coffee to students and faculty. This would be an opportune time to publicize the other events they will be sponsoring for students during the year.

Other suggested activities that would attract student attention included a welcome back to school cinnamon-bun eating contest and an open-mic night at the end of the semester with advertisements and press releases to make students aware of the events. Keeping the students involved throughout the year was felt to be a key factor in increasing business. Some of the activities included in the schedule would increase the hours the bagel shop was open and therefore the overall expenses. McGuthry would need to evaluate the cost and benefits before adding these types of activities. The decision to extend the hours of operation (say from 6:30 am to 2 pm and from 6:30 pm to 9:30 pm) would also affect the menu offerings. Hole in One Bagels would need to offer a wider variety of specialty coffees and sandwiches. With the addition of more specialty coffees may also come the need to add desserts during the night hours.

Another way to get the attention of students was to offer promotional discounts. Hole in One Bagels could give students 10% off their purchases on Tuesdays with a school ID. This would increase business on a slow day and give students the feeling that their business was appreciated. In addition, customer loyalty cards could be offered to students. The loyalty cards would promote customer retention by allowing student customers to get a free bagel sandwich once they have purchased 12 bagel sandwiches at the regular price.

A more aggressive tactic would be to open a bagel kiosk on campus for several hours in the morning to catch students and faculty as they were going to class and as classes were changing. This would require permits from the campus, additional equipment, and labor costs would increase.

A second promotional plan was developed for the Fort Mill community. The major portion of the Hole in One Bagels' business came from the community segment of business and professional workers. To attract this segment, the store needed to differentiate itself from competition. Therefore, McGuthry must continually search for new flavors of spreads; different formats for bagels such as gourmet sandwiches; increased product offerings such as new breads, wraps, and rolls; as well as, different specialty coffees and even different business venues such as lunch and dinner options. Each of these should be looked at seriously with input from customers on where improvements need to be made.

With the bagel industry being in the maturing stage of the product life cycle, the marketing tactics outlined focused more on persuading consumers to buy. Competition in this stage generally grows intense. Individual companies must change their marketing mix to differentiate themselves from the competition and to attract new business. This is more of a defensive strategy that maximized profits while defending market share. One of the tactics used during this stage was offering sales promotions such as coupons, loyalty cards, or special events. Hole in One Bagels could use coupons on Teacher Appreciation Day, Mother's Day, and other holidays. The promotional chart above has a 10% coupon for Mother's Day as an example.

Another sales promotion idea was the introduction of a customer loyalty card. This would increase Hole in One Bagels' customer retention and loyalty. Customers would receive a free bagel after purchasing 12 at the regular price. After some research, it was also found that several organizations celebrate a national Bagel Day. Although, several dates came up, all of them were in February. Therefore, during February a special promote called "Bagel Month Madness" was suggested. During the month, Hole in One Bagels would give customers a free drink or a free cookie on certain days of the week or month with the purchase of a bagel. Students could be creative and develop other special offers during the month.

Sponsorships provide a great way for the business to get involved with the community and increase awareness about the company. The bagel shop could get involved in a sponsorship for a youth summer sports league such as with the local YMCA. In addition, holidays provide opportunities for fun activities that could take place at the store. An Easter Egg Hunt for children on Saturday around Easter time would be a great way to get people into the store. All of these activities involved making people aware of the bagel shop and letting word of mouth take its course.

Hole in One Bagels could proactively seek alliances with other stores in the area by exchanging business cards and/or flyers to be posted on bulletin board or left on counter tops. The shop could also have a business card drawing bimonthly. Customers can drop their business card in a basket and win a breakfast for their company for a discounted price. Hole in One Bagels could also make a profit out of old bagels by selling old left over bagels as doggy bagels. This product could also be marketed to veterinarians or pet stores as delicious treats for dogs.

3. Evaluate the personnel policies and procedures outlined in the case. Are they effective in training and keeping employees on task? What changes would you make?

Reviewing the policies and procedures for the Hole in One Bagels employees, indicated that there were detailed rules outlining employee duties and responsibilities. Following these procedures allowed the business to run efficiently and provided the best possible service for customers. They were used as the basis for the training that was provided for employees. McGuthry felt that the policies and procedures were important but not at the expense of good relationships with employees. He constantly worked to make sure there was a good balance between fun and work. In looking at the various policies and procedures, the following recommendations are suggested:

1. Investing in T-shirts for the employees--This would offer the shop a warmer atmosphere. They would give the business a professional look.

2. Check To-Go-Orders for accuracy. Have the employees check twice to make sure the customer is getting everything they ordered.

3. Have meetings with employees and keep them up-to-date on the day to day problems and challenges. Also allow employees to express their opinions on certain issues about work and incorporate their suggestions into the procedures.

4. Hole in One Bagels' labor costs were above the industry average. What could McGuthry do to lower these costs?

After researching labor cost, there were several options that may be helpful to Mr. McGuthry in lowering labor costs. To maintain standards and the level of service expected by McGuthry's customers, he studied the labor situation carefully and considered the following recommendations:

1. Implement of a training program that would assure that employees understood their duties and responsibilities. This would make sure that the staff had complete knowledge of the business.

2. Provide reward incentives for them to reach at the end of the week (i.e. a pizza party). Happier employees lead to happier customers and therefore a larger customer base.

3. Maximize each employee's time by assigning them to a station with specific duties and responsibilities. Much like a production line, each employee could be assigned a station. For example, one person could be preparing the coffee when orders are made. The second person could prepare the bagel and the third person could take the money. The stations still provide the customer with one-on-one service, but in a more timely fashion. Setting up stations with more efficiency could eventually lead to a drive through system.

4. Analyze the work flow and work space productivity for possible improvements in efficiency.

5. Hole in One Bagels made catering sales to groups and doctor's offices and school. How could McGuthry increase sales in the catering area?

At the time of the case catering was a small percentage of the company's business; however this was an area with substantial opportunity for grow given the demographics characteristics and business growth around the area. With the fast pace of businesses today and the pressure for increased productivity, more business are ordering catered lunches. Hole in One Bagels had a chance to fill this need by providing a fast, healthy, convenient, gourmet luncheon catered and delivered at a reasonable price. To build this segment of the business, McGuthry needed to focus on menu development and quality service. Businesses expected the order to be correct 100% of the time and have little tolerance for mistakes. One mistake could cost Hole in One Bagels repeat business. Business customers don't complain they switch providers.

To take advantage of the catering business Hole in One Bagels needed to advertise in business and professional offices. McGuthry could do this by sending a personal cover letter, a flyer and a catering menu to select local businesses. The letter would be addressed to the owner or a secretary depending on who is in charge of ordering food for breakfast, lunch, or special events for the company. The letter would provide information about Hole in One Bagels' catering service. A 10% discount would be given for the first order as an incentive and other discounts would follow through the use of a loyalty card. The catering menu would suggest different breakfast and lunch packages that could be ordered. A prospect list of current businesses in the area that may potentially use Hole in One Bagels would need to be identified. Using the Yellow Pages or accessing a database like Reference USA would allow McGuthry to obtain names and addresses of potential business clients. Using Standard Industrial Classification (SIC) codes or the new North American Industrial Classification System (NAICS) sorted by geographic area would produce a list of small business contacts in the area for McGruthy to use as a mailing list. The letter should be addressed to the owner/manger and a follow-up phone call should be made to the owner and person in the office that actually orders catered meals.

6. McGuthry discussed trade marking the "Bagizza." What has to be done in order to trade mark a product and do you think that trade marking the "Bagizza" would be in McGuthry's best interest?

One of Mr. McGuthry's ideas to improve the marketing strategy of Hole in One Bagels was to introduce and trademark a pizza bagel cleverly called, the "Bagizza." His main concern was whether or not introducing this product would boost his sales enough to outweigh the costs incurred. McGuthry looked at the option on both sides of this issue. If he introduced the "Bagizza" he faced the costs associated with pursuing the trademark and those associated with purchasing the equipment necessary for producing the Bagizza. Besides the administrative and legal fees encountered in purchasing the trademark, McGuthry would also need to buy the needed materials, i.e. bagels, pizza ingredients, labor costs to train, and an additional piece of equipment costing $2000 (used) that were required to produce the "Bagizzas." Since the machine would be purchased used, one must also think about repair costs of these specialty machines. If "Bagizzas" became a good selling product, then McGuthry would increase his sales and recover the money invested in the trademark. If the Bagizza did not reach the required level of customer demand, the investment would be a substantial loss and hurt his attempts at other forms of marketing.

McGuthry realized that it would cost money not only to pursue the trademark but also to enforce it. If he had to go to court to enforce the trademark, the costs could be substantial. Mr. McGuthry has made it quite clear that his available capital was not at a level that could adequately handle a risky venture. He would have to have considerable confidence that this new menu item would be highly successful before making this type of investment.

The second option was to go beyond the "Bagizza" and bring back the highly popular pizzas, which were once made at Hole in One Bagels under the previous management. With the reintroduction of the Hole in One Bagels' pizza, new dinner hours (5 PM-10 PM) would need to be added in order to appeal to a potential dinnertime market. This would require putting together a schedule, which incorporates a breakfast shift, a lunch shift, and a dinner shift. In addition to the chef for the breakfast/lunch period, a chef would be needed for the Pizza side of the business. As for marketing, additional advertisings for these new offerings would be needed to reintroduce the once-loved Hole in One Bagels' pizza. If the sales increase through this venture, then perhaps an introduction of the trademarked "Bagizza" to the lunch and dinner customers would then be in order.

It seemed that at the present time in order to grow sales, McGuthry first needed to expand his marketing strategies, before he ventured into expanding the product line. "Bagizza," may be an option for some time in the future.

7. Bagels are a part of the quick casual industry which is growing rapidly. Research what other restaurants in the quick casual industry are doing in terms of marketing and product expansion. Could Hole in One Bagels use any of these strategies or tactics to help with its objective of increasing demand or cutting costs?

The quick casual industry provides fresh, high quality products made to order for customers who are willing to pay more instead of settling for the typical fast food value meal. There were a number of examples of companies that have been successful in the quick casual market. Companies like Chipotle a leader in the quick casual sector, focused on upscale burritos. Other restaurants like McDonald's typically considered a fast food chain realized the emergence and need for this quick casual atmosphere. McDonalds has moved into this quick casual market by partnering with Fazoli's making Italian food "quick." Other the fast food chains also entered the quick casual industry, wanting a piece of this market are companies like Arby's and their market fresh sandwiches. Other large players include Panera Bread and Atlantic Bread. In most cases the success of the store depends on creating the right experience for the customer (Technomic, Inc. 2002).

The bagel industry was seen as fitting into the quick casual market by providing customers unique flavored bagels and cream cheese along with a variety of luncheon sandwiches. If bagels continue to be a part of this market, it will be necessary for owners to continually innovate with new varieties of bagels and breads as well as new luncheon options. Consumer tastes are continually changing. To stay ahead of the game in a mature market, differentiation is essential.

8. Convenience stores and grocery stores are the major competitors of Hole in One Bagels in the Fort Mill area. How much do you think convenience and grocery stores effect Hole in One Bagels sales? Are these stores a major influence in the bagel market?

In 2002 the consolidation of the fresh bagel industry, seemed to be leveling out. Some such as Ron Savelli, vice president of research and development at Einstein/Noah Bagel, have suggested that bagel sales in dollars have increased except for a slight decline in the frozen bagel market (Harter 2001). Others including Bill Rianhard, president and chief operations officer of New World Coffee--Manhattan Bagel report positive growth especially in the fresh bagel market sales but indicated declines in fast food chains and convenience stores (Harter 2001). Both see a decline in the bagel offerings of fast food and convenience stores. In the grocery store sector, bagels were reported as being one of the least profitable in-store bakery products and have therefore been cut back or total dropped from the fresh bakery options.

Overall the 2002 fresh bagel market was more positive than that it has been for quite a while. Customers who wanted quality are coming back to bagel stores and sales of in-store bagels were stable or slightly declining (Harter 2001). Geographically some market sales were better than others, with the Northeast being the most lucrative market because of the marketing dollars spent on promotion in those markets.

In the Fort Mill area there were 167 convenience stores each with a potential for selling bagels. The market saturation provides substantial competition for Hole in One Bagels. However, trends seem to indicate that the fresh baked bagel specialty store seems to have the current advantage in the market with at least slight increased in demand while grocery stores and convenience stores are showing slight declines.

9. Analyze Hole in One Bagels' income statements and discuss its financial situation from 1998 to present.

This table compares Hole in one Bagels' financials to the industry average. These numbers came from Dunn & Bradstreet Industry Financials. The ratios show that Hole in One Bagels' gross profit is higher than the industry, but the net income for Hole in One Bagels is almost 7% lower than the industry. This means that according to sales McGuthry has a great business, but his expenditures must be cut. Some examples and suggestions on how to improve the net income ratio are discussed further in the answer to the next question.

10. What changes could be made to help Hole in One Bagels' improve its net profits?

Hole in One Bagels was purchased with the intend of keeping it a lifestyle business that would provide an income for the owners family, make a contribution to the community, and create many happy hours of conversation and happiness to the owners. The following desires are outlined:

* desire to keep business a "lifestyle business"

* desire to keep current customer base.

* desire to keep family atmosphere.

* desire to increase operating profits.

With these basic desires in mind, there are two ways to grow the net profits of the business. These strategies are to: lower expenses (cost of goods sold, fixed costs, operating expenses) or to increase sales revenues (marketing product development, location). As a starting point, McGuthry should focus more on making the current sales more profitable. Any effort at improving results must begin with management of operating expenses, particularly payroll. In the retail bakery business expense control and specifically payroll is the primary driver of profitability. Once expenses are under control and producing better profits, then efforts need to be taken to increase market share. This is a very powerful combination (The Profit Gap 2001).

Recommendations for lowering expenses include:

* Explore the layout of the serving area. Do a time study analysis of the employees. Conduct a test to see how fast it takes each employee to execute an order. If possible, the most efficient employees should be on the shift during the busiest hours. (This may reduce the labor costs). It may be helpful to bring in an outside consult on workflow and workspace productivity.

* Continue to evaluate the seventeen suppliers in relationship to any changes in the business situation and the environment. Can the number of suppliers be consolidated to take advantage of economies of scale? Forming partnerships with vendors can decrease costs.

* Evaluate the expense categories that look out of proportion to the current bills (telephone, bank charges, etc) that were from the previous owners and change to the actual expenditures. This will be needed for developing accurate financial projections and comparisons.

* Level out overhead expenditures throughout the year to get an accurate picture of the cash flow rather than the turbulent rises in certain months when large bill are due such as insurance.

* Provide self-service options where possible. Can customers choose their own drinks? Can items be pre-wrapped and arranged where customers can make their own selections?

Recommendations to increase revenues include:

* Differentiate from competition by adding new flavors of bagels, spreads, breads, soups, coffees, etc. These items can be rotated on and off the menu to provide variety and kept the menu fresh. The new trend was the bakery cafe concept, a neighborhood eateries a little bit out of the ordinary that carry fresh bread, sandwiches, soups, and coffees with a novel atmospheres and fast, healthy, quality, gourmet food. Hole in One Bagels may be able to take advantage of the popularity of the quick casual dining trend.

* Use the media outlined in the promotional campaign to increase sales and measure the results from each media used. This can include: coupons, advertisements, press releases, direct mail letters, loyalty cards, etc. Sales promotions would also be effective since bagels are in the maturity stage of the product life cycle. This would include the promotion of upcoming special events, sponsorships or charities activities.

* Develop a Come Back for Lunch program to current customers to increase market penetration with current customers.

* Pay attention to decor. Would new paint or a rearrangement of the furniture give the place a new feel and increase sales.

* Be creative and put together some grab-and-go items that people can pick up when they are waiting line to get their bagel.

* Gift baskets with gourmet bagel and coffee items are often profitable. Create sample baskets for holidays, birthdays, and anniversaries. Special arrangements can also be created as 'FedEx Bagels" to send to friend and relative as gifts for special occasions.

* Provide single serving smaller individually packaged goods catering to convenience. Keep in mind the new Toyota SUV's feature 9-cup holders and the new Volvo has 14-cup holders. Do you have a food packaged to fit into this convenient space provided by the auto manufacturers?

* Pricing is an important issue. Prices should be review every three to six months. Increases should not be made across the board. One retailer suggests pricing be set at four time the cost of materials. Overall consumers believe that prices are high but that high prices for high quality seemed fair (Unrein 2002, October 1)

* A brand strategy is essential to gain market potential. Hole in One Bagels should be a household name. A strong branding strategy and logo will add character and value to the products sold. The brand and log should center on associations with the bagel-coffee culture and could include a variety of options like music or books that coincide with these products. Once a branding strategy is in place, it should be used in ever aspect of the business. Utilizing talent locally like university students is possible or one can consult with professionals to develop the brand.

* Hole in One Bagels could open a kiosk in any of several possible locations. One option would be to open a kiosk at Panthers Stadium. Vendors must receive approval from the stadium and pay a percent of the gross earning to the Panthers. However, there are currently no bagel vendors at the stadium and therefore the cart would most like receive approval. A second location for a kiosk would be on the near by university campus for faculty and students for a few morning hours Monday through Friday.

* A final option deals with the current location of the bagel shop. The business has occupied the same location in a small house on a side street in Fort Mill for the last seven years. The current store location has high rent and maintenance costs. Most people would agree that the bagel shop has a strong loyal customer base. Relocation within the city to a more visible location preferably with more walk-in traffic would allow the store to retained its current customer base and while increasing demand from new customers. A store closer to the Interstate would be more cost effective based on square foot dollars and traffic flow. Other locations should be considered based on walk-in traffic such as the new development of the other side of the city. The quality of the product is outstanding; therefore it makes sense that a higher traffic flow would generate higher revenues.

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Barbara K. Fuller, Winthrop University

Michelle Burns, Winthrop University

Sample Six-Month Promotional Campaign for Students

Month Newspapers Press Releases

January Convocation Back to school
 eating contest *

February Open-mic night *

March Mid-term study
 hours school
 newspaper

April

May Final exam study
 hours school
 newspaper

June

Month Sales Promotions Loyalty Cards

January 10% off Tuesdays for Valid all times
 students

February 10% off Tuesdays for Valid all times
 students

March 10% off Tuesdays for Valid all times
 students

April 10% off Tuesdays for Valid all times
 students

May 10% off Tuesdays for Valid all times
 students

June 10% off Tuesdays for Valid all times
 students

* Will require additional hours of operations and costs

Sample Six-Month Promotional Campaign for Community

 Press Sales Loyalty

Month Newspapers Releases Promotions Cards

January New Years Valid all times

February Free cookie Valid all times
 with a bagel
 purchase

March Sponsor Valid all times
 YMCA T-Ball
 team

April Sponsor road Valid all times
 race Host
 Easter egg
 hunt

May Summer 10% off for Valid all times
 Mother's Day

June Sponsor youth Valid all times
 summer league

 June July August

Cost of Goods Sold $13,306.29 $16,506.68 $23,191.23
Gross Profit $35,938.08 $46,602.42 $33,092.22
Gross Profit/Sales % 73.15% 73.84% 58.80%
5461 SIC Average 63.31% 63.31% 63.31%
Difference 9.84% 10.53% -4.52%
Net Income $5,624.58 $12,850.44 ($10,759.10)
Net Income/Sales% 11.45% 20.36% -19.12%
5461 SIC Average 11.01% 11.01% 11.01%
Difference 0.44% 9.35% -30.13%

 September October

Cost of Goods Sold $16,602.71 $20,662.05
Gross Profit $38,799.29 $35,246.93
Gross Profit/Sales % 70.03% 63.04%
5461 SIC Average 63.31% 63.31%
Difference 6.72% -0.27%
Net Income $5,033.88 ($1,452.45)
Net Income/Sales% 9.09% -2.60%
5461 SIC Average 11.01% 11.01%
Difference -1.92% -13.61%