Sugar Bowl SWOT Analysis Case Study Sample

Strengths

• Improved financial performance with rising profits in the beginning of 2011. It provides opportunities to repay all the debts within the defined time frame;
• Holding a sufficient number of bowling lanes (16) with upgraded West lake technology and machinery that allowed to reduce expenses for renovations;
• A strong compliance of the facility design with current building and safety codes. It ensures safe operations and reduces incidental expenses;
• Extremely valuable “asset beyond bowling lanes: a state-issued liquor license and county permit to serve the full range of alcoholic beverages” (Hamermesh & Zalosh, 2013, p.4);
• They allow focusing on more profitable segments than bowling lanes;
• Having a license to prepare and serve food onsite that allowed replacing the limited menu. It helps to increase consumer’s average spending;
• Selecting and offering the main menu items and specialty drinks that provide highest contribution margins. The persistent promotion of those items by staff increases average spending;
• The assistance of an experienced operational mentor who was able to share inside bowling business information;
• The proximity of Sugar Bowl to nearby universities and colleges. It provides easy filling staff positions with people who clearly understand needs of target audience;
• Effective customer relation management based on customers’ feedbacks. It allowed improving the consumer experience and staff performance and getting good ideas of customers tastes and preferences;
• Strong advertising campaign that included online marketing from the launch in May 2011 through the end of 2011;
• The popularity of the venue among the younger population in Raleigh. It facilitates the expanding customer base;
• Effective Public Relation efforts. This strength facilitated the communication with the target audience.

Weaknesses

Financial

• The need for significant funds to turn the legacy bowling business into a lively and plush bowling lounge and night club;
• The obligation to pay loans interests quarterly;
• The obligation to repay principal in full at the end of a defined time frame;
• An increase of Sugar Bowl services cost caused by rising cost of rent and insurance;
• Inability to spend additional costs per customer in conditions of high volume and customer turnover;

Environmental

• The need to renovate outdated 16,000 square foot interior that requires time and funds;
• The need for additional expenses to develop new kitchen options to replace limited food and drink menu that provided marginal revenue from Westlake Lane;
• Inability to build and run a full-service restaurant facility in the existing space due to the lack of funds. It limits cash amount generated;

Related to employees

• Noncompliance of Westlake’s full time employees with new criteria for staff that required most productive choice for Sugar Bowl. It required additional expenses for finding, hiring and training new staff;

Social

• A focus in event sales on personal connections of the event sales agent. It limited the volume of event sales.

Opportunities

Socio-demographic

• The growth trend of Raleigh’s population with an increase by 46.3% from 2000 to 2010. This opportunity provides potential for the customer base growth;
• The favorable demographic characteristics of Raleigh’s population that are the median age of 31.9 and a large share of people aged 25-44 years. They correspond to Sugar Bowl’s targeted age groups;
• The influx of young professionals and older graduate students that expands the target market. 47% of residents aged 25 years and older are college or higher degree holders that fall into the target audience;

Competitive

• The lack of direct competitors in Raleigh;
• Developing a new brand of Sugar Bowl;

Environmental

• Reconfiguring the space to seat 150 people. Doubling capacity to 150 people would increase the volume of customers;
• Expanding facility for full bar and table service. Using new table and bar configuration would provide better profitability;
• Creating customer-friendly environment that allows maintaining the customer base and attract newcomers;
• Accommodating the popular band and standing crowd to attract their fans, which could become repeat customers;
• Further improving and renovating the bowling alley. It would help to make the venue more attractive because bowling remains the popular kind of sport;

Polishing Your Writing to Make it Shine

Marketing

• Shifting a focus on more profitable segments – alcohol and food based on the tendency of bowling consumers to spend 50% of their expenses on alcohol, 30% on food and 20% on lane admission;
• Charging consumers by the hour rather than by the game;
• Cost effective online marketing; it is efficient because the target audience uses online services frequently. It facilitates developing customers relations;
• •Using word of mouth that helps spread information among Raleigh’s young professionals and graduate students as the target audience and increase average spending and average capacity on
  Thursday- Sunday nights;
• Employing offsite caterers; their service costs far less than a full kitchen installation;
• Tweaking menu choices based on customers tastes and preferences that replaced limited menu. It allowed narrowing menu choices and re-negotiating catering costs to provide increased average spending;
• Increased efforts for private event sales with a focus on Raleigh’s academic departments and businesses as groups that provide highest contribution margins in event sales;
• Designating special schedules for private events that allowed not sacrificing revenue from regular customers;

Customer relations

• Implementing effective Customer Relation Management through creating the customer base and the development of incentives for customers to drive repeatedly;
• Group orientation; reconfiguring the space to provide flexibility for large and small groups is an element of adapting the facility to needs of the target audience;

Related to staff

• Easy filling staff positions due to Sugar Bowl’s proximity to local universities;

Seasonal

• Increased average capacity in the fall season;

Partnership

• Establishing partnership with a local dating service. It makes their single clients repeat customers and thereby increases Sugar Bowl’s customer base;

Mentoring

• Inside bowling business information shared by an experienced operational mentor;

Threats

Social

• Declining popularity of weakly “league” bowling teams;
• Increasing competition in the family entertainment segment;
• Reducing family leisure time due to overscheduled kids and dual income families;
• Unpredictable changes in consumer behavior trends;
• Reduced consumers spending caused by increasing utilities and healthcare costs;

Financial

• The rate renegotiation or truncated loan term in case of the failure to comply with additional terms of the bank loan;
• The bank’s timeline for opening the venue and the assigned minimum level of the actual revenue;
• Rising cost of rent and insurance that affects the cost of Sugar Bowl service;

Related to employees

• Higher service and later hours expectation from employees;
• Higher level of shrinkage due to employing young and sociable employees that requires consistent management control;
• High cost of hiring new staff and their training (about $750 per each);
• High cost of health insurance coverage for employees;

Environmental

• Unpredictable catering estimates;
• Increased site damage by rowdy customers and increased insurance cost resulted from providing liquor service;
• Machinery malfunctioning that requires time and expenses to have them repaired;
• Lowering average capacity in spring and summer due to diminished season population that drains cash and incidental “cushion”.

Actions

The most successful Givens’ actions:

• Maintaining tight cost control through the business transition;
• Involving graduated students that reflect Sugar Bowl’s desired demographic for design renovation and hiring licensed architect to ensure compliance of design and plans with safety and building codes;
• Employing offsite caterers rather than using the option of an expensive full kitchen installation;
• Hiring an experienced general manager that implied delegating responsibilities to a person “capable of independent direction” (Hamermesh & Zalosh, 2013, p.5);
  The least successful Givens’ actions:
• Selecting a general contractor on the criterion of lowest cost rather than an experience that led to unexpected cost for permitting, distribution and construction delay for seven weeks.
• Making attempts to retain old employees that did not meet new criteria.
  Other options Givens might have pursued:
• To manage the business on her own instead of hiring a general manager;
• To sell Sugar Bowl to a local investor and accept a job offer from a consulting firm in New York.

Strategies

The recommended strategy is the focus strategy that implies developing the urban bowling lounge concept adapted to meet needs of graduate students, young professionals and families enjoying urban lounge customer-friendly environment.

Sugar Bowl is a viable business because:

• There is a growing market;
• There are no local competitors;
• After five months of operations, Sugar Bowl started generating net income ($231,065 and $174,329 in Q4 2011 and Q1 2012 correspondingly) sufficient to develop business and repay all debts ($724,208) within defined five year timeframe.