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The New Broadway Café Business Plan
Designed by Gem Global Consulting Group
Group 3, Section 3
Gabriel Kwakyi
Zachary Katikos
Corey McHenry
Mira Bajrami
Shivam Patel
Having recently acquired the rights to the Broadway Café, we, Gem Global Consulting
Group, have developed a new, successful business plan designed to revitalize the Broadway
Café. Our strategy will take into account the several factors that make up the current business
situation. These factors include the opportunity to implement Information Technology systems
and supply chain improvements, the broad range of products offered by the Broadway Café, the
competitive environment, and the fact that the café has been a hotspot for several years before
the decline in sales over the past 5 years. Our plan will also focus on positioning the Broadway
Café to regain market share from competitors, and improving Electronic business procedures,
employee ethics, and customer security. In conducting our thorough analysis, we at Gem Global
have concluded that the Broadway Café is poised to spring ahead and has the opportunity to
become a once more valuable enterprise. We envision the Broadway Café as becoming the
market leader via technology implementation, business collaboration, and strategic planning.
With regards to the competitive environment, the city of East Lansing has many
competitors in the coffee market, including traditional coffee shops, such as Starbucks, Bigbys,
Espresso Royal, as well as the residence hall cafeterias and Spartys. Other competitors include
sandwich shops, such as Cosi and Panera, which, although not coffee shops, are in competion
with the Broadway Café’s deli offerings.
In addressing switching costs, such as customer exit costs and retention efforts, the
Broadway Café will need to implement technologies and improvements to ensure that customers
actually recognize and are aware of the cost of switching to another business, such as the lack of
deli offerings by other coffee shops, and will thus be more likely to stay with the Broadway
Café. Such improvements will focus on providing more value to customers by way of more
product offerings and higher quality products than other businesses. This strategy will increase
costs in the short term; however the cost of losing customers to the competition is far greater.
With regards to the business climate and the recent recession, competition is higher, as
customers are seeking more product, quality, and service for less money. In such a situation,
new entrants are able to provide more value for customers while charging less, and therefore
have the opportunity to outcompete existing businesses that are unable to reposition themselves
or their products. An example of this includes the computer manufacturer Dell, which was able
to provide cheaper computers than retailers through selling online, directly to customers.
Retailers and existing businesses had not anticipated or worked to prevent the threat that Dell
presented, and were outcompeted as more customers switched to Dell. Existing competitors
must stay on their toes and be ready, not only to react, but to act before new entrants do. The
threat of new entries will depend on the extent to which there are barriers to entry. Such barriers
include high initial investments and fixed costs, such as the costs of setting up a brick and mortar
establishment or building supply chain to support that new establishment. Brand loyalty and
established brand equity may also deter new businesses. New businesses may also experience a
scarcity of important resources, such as qualified expert staff, or encounter problems with
supplier control by existing competitors.
In the coffee café market, there are several substitute products or services that customers can
turn to. A coffee café is a service by nature, in that it offers customers a variety of options,
including providing coffee prepared for them, which will save customers valuable time. The
Broadway Café is also a public place that customers can sit, read newspapers, work, and study
in. A substitute service could be a library, recreation center, or any other public place that a
customer could temporarily occupy. The Broadway Café will overcome this by creating an
ambience that customers will enjoy. Coffee cafes also offer customers the ability to obtain a
wide variety of products that they might not normally have access to, such as caramel mocha
Frappuccinos. Substitute services include grocery stores, where customers may find such
products in commercially offered form or ingredients. The Broadway Café could counter this by
offering better-blended products than customers could make on their own, or higher quality than
other avenues can supply. The Broadway Café could also promote the “coffee experience,” and
focus on not simply the product, but the chance to enjoy sitting in the Broadway Café and
experience the atmosphere that we wish to establish. Cafes also offer products, such as coffee,
tea, and snack foods. Substitution products are widely available by other coffee cafes and in
grocery stores. The Broadway Café plans to counter substitute product offerings by providing a
more enriching customer experience than other cafes, along with better product quality.
With regards to the current business climate and recent recession, buyers have experienced
increased power; customers are choosing to spend money on other items, thus lowering the total
demand. Customers in the East Lansing coffee and related product industry also hold a high
degree of buyer power due to the large concentration of competitors. In order to succeed in a
climate of high buyer power, the Broadway Café will need to a wide product variety with a focus
on high quality and level of service to entice customers to want to go to the Broadway Cafe.
Since there is a large concentration of coffee shops (buyers) in the East Lansing area,
supplier power is high and suppliers are able to leverage this and increase costs. In order to
decrease supplier power, the Broadway Café will need to develop supplier relations. We will be
able to facilitate this through utilizing electronic procurement systems that help provide suppliers
with updated, valuable information which will yield higher measures of control for both
upstream and downstream companies. Buying more raw materials and making more items in-
house will also reduce supplier power by reducing the amount of value-added activities that
suppliers can charge extra for (pre-ground coffee beans verses whole beans).
Since the Broadway Café is currently a small, single location company, the Broadway
Café does not have the degree of supplier negotiating or bargaining power that larger companies,
such as Starbucks, possess. The Broadway Café needs to drive down supplier power and grow
revenues before it is able to deliver lower cost products while retaining value and still generating
a profit. With this in mind, Gem Global has proposed a differentiated strategy, which will be
based on leveraging the Broadway Cafe advantages of operational history, a loyal consumer
base, and a wide, unrivaled product offering. This strategy will focus on retaining existing
customers and building the customer base through delivering value in a diverse array of high
quality foods and services. In providing this level of value to customers, the Broadway Café will
be able to justify a higher product cost, thus easing product source price constraints and enabling
the Broadway Café to position itself in the coffee and related products market and providing a
clear path for future growth.
As an integral part of revamping business efficiencies, E-business strategies provide
unique opportunities for the Broadway Café to increase revenues and decrease costs. One of the
first steps in the business strategy will be to implement a multifunctional company website that
keeps customers constantly connected. The website will expand the brand presence of the
Broadway Café beyond the physical site and also provide opportunities, such as product listings
and high quality supplier certifications, to maximize the effectiveness of the differentiation
strategy. One outcome of the website is that the Broadway Café will be transformed into a
“Click and Motor” business. As part of this E-business strategy, customers will be able to order
products for pickup from the website, and, set up online payment through a customer account
function. For example, a customer will be able to place a specialized order, to be picked up at
8:50 AM. The order will be automatically charged to the customer account, which is linked to a
bank or credit card account and is payable at the customer’s convenience via the integrated
payment service. A mobile application of this feature will also be developed to take advantage
of the growing popularity of mobile devices, such as the iPhone. The Broadway café will
receive an order and have it made and ready for customer for pickup at 8:45 AM. Customers
will also be able to set up a rewards account, which will allow them to view their recent
purchases, available rewards, and other relevant loyalty account information. Clickstream
programs, such as ClickTracks will be a key metric in measuring the effectiveness of the
website, website features, and citing areas for improvement, as well as uncovering useful
customer information, such as demographics and purchasing habits, that can direct marketing
efforts.
The business strategy will also include an E-procurement component. This will enable
better supply chain management and will help to drive down costs related to orders,
transportation, and inventory. The E-Procurement system will accomplish this by networking
buyer systems with supplier and shipper systems, which will ultimately drive down total supply
chain costs, leading to decreased costs for the Broadway Cafe. For example, data mining
programs will also have the ability to uncover trends (e.g. more coffee is bought in the Winter)
and send that information to suppliers, who will be able to make more accurate forecasts (e.g.
decrease inventory levels after Winter), thus reducing inventory costs. E-Procurement in
conjunction with the differentiation strategy will drive profits up, as costs will be lower, leading
to higher profit margins.
Technology will also be used to benefit the employees, managers, and executives of the
Broadway Cafe, by creating an employee portal. An employee portal will provide a specialized
intranet that is able to facilitate communications, provide resources specific to employees, and
other business related tools that will enhance productivity. Managers will be able to schedule
meetings, view analytical and transactional information from the company, email/communicate,
and with employees, all from a secure online location. Employee ethics procedures, policies, and
information will also be available via the employee portal.
Kiosks are another example of future technologies that could help differentiate the
Broadway Café. Self-service kiosks would increase productivity and decrease lines in a novel
way by allowing customers to order products via the kiosk, similar to the self-service stations
found in grocery stores. Kiosks will be a viable option once the Broadway Café has enough
capital to invest. Food service companies, like McDonalds, have begun to implement these
platforms to help increase the speed of customer throughput and efficiency.
Information and data protection is a critical, yet difficult part of operating a business,
however information can be made more secure with policies, training, security features, and
communication. As part of the business strategy, the Broadway Café will implement ethics and
information security policies. Involving all employees in as many business processes and
workings as possible will instill a sense of trust, self-interest, and responsibility for the protection
of company information and the success of the company. We will implement an open door
policy to make employees feel comfortable asking questions, creating an open environment
where employees are able to take ethics issues seriously. The more employees feel as though
they are involved and important in the company, the more they will hold themselves accountable
and to higher standards. With regards to more high-level, confidential information, access will
be restricted via authorization methods, such as fingerprinting and access cards to only upper
management and executives. An information privacy policy will be developed, allowing for less
confusion and ambiguity amongst employees. The policy would be supplemented by employee
ethics and security training programs, which would make employees aware of the dangers of
insiders and the consequences of spreading confidential information.
Thirty percent of security breaches occur from within companies, making employee
involvement a key factor and the first line of information security defense. Training, meetings,
seminars, and a careful hiring processes will ensure that employees are trustworthy individuals.
Examples include ethical training to demonstrate that stealing time is stealing company money.
Other examples include trainings to teach employees to never write down passwords, leave cash
registers unattended, or give away valuable business information, such as purchasing or customer
information. All of these trainings, policies, and information will be available for employees to
consult at any time from the employee portal. Firewalls, filtering programs, and data encryption
programs will work to ensure that data is either prevented from being stolen in the first place or
is encoded in the event of theft, as well as preventing against viral and malicious programs intent
on harming the Broadway Café systems. When employees quit or are no longer authorized to
access to company information, the security system, in being linked with the employment roster
will automatically remove those login credentials from the system. Utilizing prevention and
information security technologies and strategies will enable the Broadway Café to operate in a
secure environment and focus on the key business goal of delivering a high level of service to
customers.
Biometric security systems offer business a higher level of security than conventional
measures do, and are being used more and more widely in places like ATMs, banks, airports, and
governmental operations. Biometric systems would help benefit the Broadway Café by securing
transactions and the exchange of information. Systems, such as a biometric payment system
would allow customers to make purchases by linking an account to a biometric signature, such as
a fingerprint, and then scanning that biometric signature each time a transaction is made.
There are however, several drawbacks to biometrical security. The first is the high cost
required to set up these systems; these systems utilize high-level technology and are thus very
costly. The second involves the fact that implementing these changes will isolate some customers
who do not want to use new systems. These customers, for example the older demographic, may
decide to go elsewhere if they perceive that the Broadway Café is changing and not
accommodating to their preferences. The third concern would be that the investment would not
generate a sufficient return, as measured by a decrease in costs caused by security breaches.
Although biometric security would provide more security, the costs do not outweigh the benefits
for a company such as the Broadway Café. Transactions, such as purchasing coffee, do not pose
a large enough risk to security to require the implementation of biometric securities. The
Broadway Cafe will not implement biometric security systems.
Overall, there are many benefits that can be obtained from using technology to help
develop and deliver business strategies for the Broadway Café. With the introduction of a
website that supports Internet sales, the Broadway café website will become a key factor in
generating revenues and will provide value to customers with increased order flexibility. With
increased E-business technology, the Broadway Café will not only be able to monitor its sales,
but create profiles for customers and individualize offers to each customer, such as providing a
specific discount on teas for customers who like tea. E-business will also enable the Broadway
Café to utilize data mining techniques to uncover useful patterns. An increase in French Roast
sales on Mondays, which could lead to useful information to support marketing and supply chain
decisions, is an example of this. Providing free wireless Internet will provide value for
customers and would allow the Broadway Café to compete with other coffee shops that offer
similar Internet access. By providing free Internet access and a comfortable, inviting
atmosphere, customers will want to spend more time in the Broadway café.
The new E-procurement system will help significantly reduce costs for the Broadway
Café and the entire supply chain by working with suppliers to help the supply chain run faster,
stay leaner, and keep total costs down. Technology will be also able to forecast reorder points
and do it automatically, selecting trusted suppliers and ordering when costs are lowest. In being
more integrated with the supply chain, the Broadway Café will strengthen relations with
suppliers and will therefore afford the Broadway Café advantages over other, non-integrated
companies. Having less inventory and better inventory control will decrease costs and achieve
long-term savings.
The new IT division of the Broadway Café will work to provide customers peace of mind
in knowing that all information received and transactions done online will be secure. The
security system will protect and ensure the security of all transactions and information
exchanges.
Ethical trainings, policies, and procedure documents will be available online on the
employee portal for employees to view and stay updated with. Technology, including layered
authorization and access, firewalls, and access keys, will enable the Broadway Café to take a
proactive approach in stopping security breaches and losses from occurring. These measures
will help make the Broadway Cafe a secure organization and will provide value through
minimizing security risks and associated costs.
In examining the implementation of new technologies, there are several costs and
drawbacks to keep in mind. Allowing customers to order online will incur costs, such as setting
up an electronic payment system and gateway, security, and hiring IT employees to maintain the
website and develop improvements. Building an integrated E-Procurement network will both
cost money to set up, as well as time and effort to establish trusted connections and relationships
with suppliers. Costs will also have to be spent to purchase clickstream data analysis programs,
set up firewalls, write security programs or purchase potential third party security. Development
of trainings, procedures, and policies, as well as hiring new employee hires to create an IT
department will add costs as well; however the total benefits outweigh the total costs.
With limited finances and decreasing sales, the Broadway Café will first need to recover
and thrive before expanding to new locations. This will put the Broadway Café in a position to
help finance new business locations and minimize the amount of debt needed. Also, for financial
liability reasons and as part of the overall strategy, the new business strategy must be
implemented and the results measured to ensure that it is both successful and effective before
money is dedicated to new ventures. This way, if the business plan needs to be altered, it will
only affect a single store as opposed multiple stores. This will also ensure that the business
strategy that new stores will be based upon has been tried and proven to work. This plan will
assist in obtaining a loan from a bank and make sure that the new ventures will be profitable,
rather than taking a chance that has a higher risk potential. Once the Broadway Café is able to
produce a return on investment and has built positive brand equity, new locations will be opened.
As a whole, the business strategy that we, Gem Global, have outlined will effectively
position the Broadway Café as best in class. We will accomplish this through redefining the
Broadway Café’s strategies and making new technology improvements. The differentiation
strategy that the Broadway Café will use will provide a wide variety of high quality products and
services that customers will be willing to pay more to obtain, providing higher profit margins.
All of the individual IT systems will accomplish tasks that will consolidate into the larger IT
strategy and support the business strategy as a whole. These systems will assist through sourcing
high quality products while keeping product costs down, increasing sales and building the
customer base. The IT systems will also ensure that all information and transactions done with
and through the Broadway Café are safe and done in a secure fashion. Each individual
component is required to support and enable the others and allow the Broadway Café to run more
efficiently, effectively, and cohesively. With redefined strategies and IT systems working in
synergy to accomplish interrelated goals, the IT system and business strategy as a whole will
succeed in making the Broadway Café a once-more profitable enterprise.
Works Cited:
http://www.cohesioncase.com/
http://www.lyris.com/solutions/lyris-hq/web-analytics/
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