Case 1 Big Bottom Market How Can a Small Restaurant and Specialty Food Store Cop

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Case 1 Big Bottom Market How Can a Small Restaurant and Specialty Food Store Cope with Highly Seasonal Sales? After Michael Volpatt, co-owner with Kate Larkin of a successful public relations firm, moved to Guerneville, California, a small town in Sonoma County in the heart of the Russian River valley’s wine country, he decided to realize his longtime dream of owning a specialty food and wine store. After meeting Crista Luedtke, the owner of two Guerneville businesses, the Boon Hotel and Spa and Boon Eat and Drink, Volpatt convinced Larkin to join him and Luedtke in opening the Big Bottom Market, a restaurant and specialty food and wine store that also sells local crafts. The three entrepreneurs invested $100,000 of their own money to convert a 1,500-square-foot storefront on Guerneville’s Main Street into a restaurant and retail store. They decided to name the restaurant Big Bottom Market after the once-booming logging town’s original name, which was inspired by its location in the alluvial flats of the Russian River. “The unique, quirky, and inspiring name fits not only the historical nature of days gone by but also the unique aspects and incredible environment of our restaurant-market,” says Volpatt. Originally settled in 1860, the wellto-do town is a now popular destination in the spring, summer, and fall for tourists and visitors who are drawn by the availability of activities on the river, hiking among the giant redwoods in nearby Armstrong Woods, or visiting the valley’s many boutique wineries. Volpatt and Larkin, who are based in New York City, would keep their day jobs but would handle the marketing and finance functions, respectively, for Big Bottom Market. They would count on Luedtke, who has experience in both the food and hospitality industries to manage the business’s day-to-day operations. The renovated storefront features hardwood floors, walls made of barn wood, funky metal chairs at its nine tables, bar stools at the counter, and a “communal table” for large parties or for people who want to mix and mingle. “Think gourmet deli meets farmer’s market meets a modern-day general store—now add in ‘lumberjack chic’ style—that’s us,” explains Volpatt. Currently, Big Bottom Market serves only breakfast and lunch, but executive chef Tricia Brown, who came to Big Bottom Market from New York City’s famous Gramercy Tavern, is pushing the owners to begin offering dinner. Brown’s menu is varied and, except for several staple dishes, changes frequently. Some of her most popular dishes include chilled cucumber soup, wild salmon Niçoise salad, green chile cheddar turkey meatloaf, chipotle sweet potatoes, and baguette sandwiches. The Big Bottom Market’s signature item is its homemade Big Bottom Biscuits, which come in a multitude of flavors, including regular, cheddar and thyme, ham and cheese, and sea biscuit (house-smoked salmon, capers, and red onions). The biscuit recipe came from Luedtke’s mother, who is one of Big Bottom Market’s 20 employees and who oversees their baking. Big Bottom Market opened in July, and in its first year of operation, sales during the busy summer months were strong, averaging between $20,000 and $24,000 per week. In September, sales began tapering off, and by November, sales were down 80 percent. “We thought we’d lose about 30 to 40 percent of our business [in the off-season],” says Volpatt, “but not 80 percent. This is my first time at the rodeo, and we were freaking out.” After analyzing their financial statements, their accountant had grim news. “At the rate you’re going, you’re going to have to close your doors,” he said. Volpatt, Larkin, and Luedtke began to trim Big Bottom Market’s expenses immediately. They closed on Mondays and Tuesdays, the slowest days, and trimmed their staff. They gathered their remaining employees and conducted a brainstorming session designed to generate ideas to keep the business afloat during the slow off-season until sales picked up again in the spring. Some of the ideas they came up with included introducing a Big Bottom Market food truck to increase sales and build the company’s brand name in the area, adding a catering service, opening for dinner, focusing more on marketing to Guerneville residents, and emphasizing the Big Bottom Market’s signature biscuits and selling them through a gourmet wholesaler, such as Bi-Rite in San Francisco.

1. C1-1. What steps do you recommend that the owners of Big Bottom Market take to manage cash flow in their seasonal business? 2. C1-2 Identify the advantages and the disadvantages of each of the ideas that the owners and their employees came up with to help Big Bottom Market survive the slow off-season. Based on your analysis, do you recommend that they pursue any of these options? Explain your reasoning. 3. C1-3 Identify at least two other options that the owners should consider to get through the slow off-season and the advantages and disadvantages of each one.

4. C1-4 Develop a two-page marketing strategy for Big Bottom Market. Which social media tools should the owners use? How, specifically, should they put them to work?

Explanation / Answer

C1-1. Big Bottom Market, situated in Guerneville, California, is a specialty food and wine restaurant. Because of its location of Guerneville in the heart of Russian River Valley’s wine country, the restaurant is highly dependent on tourism for business. Consequently, in its first year, Big Bottom Market made weekly sales of about $20,000-$24,000 in the summers. However, the sales declined drastically in the winter months due to low tourist inflow. In order to manage cash flow in the seasonal business, Michael Volpatt, Kate Larkin and Crista Luedtke (founders of Big Bottom Market) should restructure their lease rentals. In order to have inflow of immediate cash flow, the comoany should revise their prices of wine in the offseason.

C1-2 The employees and owners came up with a number of ideas during their brainstorming session. The assessment of all those options is as follows:

S. No.

Idea

Pros

Cons

Introducing a Big Bottom Market food truck

Will lead to increase in sales and will help create a brand name

Additional marketing and advertising costs

2

Adding a catering service

Additional income, business diversification

Won’t be much useful in the offseason

3

Opening for dinner

Increase in income

Higher employee costs, higher operational costs. The company only sells salads, meatloaf, potatoes and sandwiches. People generally like heavier substance for dinner

4

Focusing more on marketing to locals

Sales during the off season as well

Additional marketing cost

I highly recommend pursuing option 4 – emphasis on marketing Big Bottom Market to the locals. This idea will be the most beneficial to the company because if locals become loyal customers, then sales will be ensured in the offseason as well resulting in continuous cash flows.

C1-3

S.No.

Ideas

Pros

Cons

1

Promotional discounts to Guerneville locals during offseason

After the crowd of tourists disperse, it is a good idea to offer discounts to locals in order to keep the business afloat

Initial phase of promotions might hurt the income. However, once the customers come onboard, they’ll be loyal and supportive throughout the year

2

Build hype about the restaurant in the offseason

Through emails and social media, the company can maintain a hype amongst the customers to ensure heavy footfall the next summer

The locals might not be much enticed leading to drastic decrease in revenue of company in the winter months

C1-4 Marketing Strategy for Big Bottom Market

The restaurant should try to stay in touch with their past customers so as to ensure easy brand recall and brand recognition. Big Bottom Market must try leveraging social media platforms such as Facebook, Twitter, Pinterest to keep the customers engaged.

The restaurant must gather customer reviews to build a brand image. They should upload these testimonials and reviews on the website so as to entice the locals of Guerneville.

Big Bottom Market should consider selling some of their packaged products such as biscuits through online channel. During winter months, the locals would be unwilling to step outside in the cold. Hence, online selling would work. They can even consider charging a nominal delivery fee.

S. No.

Idea

Pros

Cons

Introducing a Big Bottom Market food truck

Will lead to increase in sales and will help create a brand name

Additional marketing and advertising costs

2

Adding a catering service

Additional income, business diversification

Won’t be much useful in the offseason

3

Opening for dinner

Increase in income

Higher employee costs, higher operational costs. The company only sells salads, meatloaf, potatoes and sandwiches. People generally like heavier substance for dinner

4

Focusing more on marketing to locals

Sales during the off season as well

Additional marketing cost

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