Academic journal article Journal of Case Studies

Northern Lights: A Student-Run Cafe

Academic journal article Journal of Case Studies

Northern Lights: A Student-Run Cafe

Article excerpt

Tom Johnson was hungry and tired. The buildings at Northern University had become increasingly quiet, as students had retreated to their rooms or quiet study spaces. At midnight, there were few, if any, options for a reinvigorating snack. His homework and studying would require much attention tonight and his stomach was growling. Tom Johnson had had just enough of this.

The lack of practical late-night dining options had been a huge void on the smaller, residential campus of Northern University. In 2009 there was a population of approximately 600 students who took classes on the Wildbrook campus, but lived on the Cliffside campus. Unlike Wildbrook, which had late night food service options on campus, Cliffside dining services closed by 10 PM. Weekend options on Cliffside were limited to mostly daytime hours. Students often spoke of their wish to have a place on campus to congregate, or to get food without taking a long drive to an off-campus food site.

In spring 2007, Tom, a business honors student decided to do a market opportunity study for a late night cafe on the Cliffside campus as part of his senior honors thesis. His initial market research showed significant demand for late night dining and events. Tom explored space on the Cliffside campus. A large space that had been previously used as a weekend grill and pub in the 1980s would be perfect as a late-night cafe. However, he couldn't reach an agreement with the dining services to allow a new late night cafe to open, so he graduated without having done anything beyond the market research.

Market Research

Nothing further happened with Tom's idea until spring 2009, when two freshmen wanted to start an entrepreneurship club. One of the club's functions would be to start and run a business on campus. Spurred on by a marketing faculty member and the results of Tom Johnson's research, the students decided to try to set up a cafe on the Cliffside campus in the location Tom had identified. The objectives of the cafe were to expand convenient late-night dining options, help student employees gain experience running a financially self-sustaining, market-responsive small business, and foster a more close knit, welcoming community environment.

An online student survey was conducted to evaluate the demand for late night dining services on campus, as well as to better understand the competitive landscape. Off-campus competitors were also identified, and their hours and distance to the campus were evaluated.

Figure 1 shows an example of responses from the survey. The results confirmed that there was still demand for a late night cafe, especially after the regular on- and off-campus dining options closed for the night. With the help of a business school faculty member and numerous negotiation meetings, a key university administrator and the dining service approved the plan to open a late-night, student-run cafe on campus.

Accepting Payment

The dining services provider was receptive to the idea of a student-run cafe. However, there were concerns about market cannibalization. The cafe managers wanted to be able to accept dining services' meal plan cards. This would make the new business significantly more attractive to potential customers, who would not need to worry about carrying cash. However, dining services had forecasted annual revenue targets, and if students used their meal plan at the new cafe, they would buy less from the existing operations. A compromise was reached. The cafe would be allowed to accept meal cards, in exchange for a 33% fee on all meal card transactions.

Financing & Operating

With a plan developed to accept payment, the students turned their attention to securing financing, acquiring equipment, renovating the cafe space, and evaluating food suppliers. The university agreed to do modest renovations to the space to bring it up to code for use, and also agreed to provide a cash register. …

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