Academic journal article Journal of the International Academy for Case Studies

Hole in One Bagels

Academic journal article Journal of the International Academy for Case Studies

Hole in One Bagels

Article excerpt

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. …

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