FroYo Cafe is a self-serve frozen yogurt parlor located in Novi, Michigan. This cafe is co-owned by Jason Smith and Dan Barr and opened in April of 2017.
Sales were as high as $16,710 in August, yet as the months got colder sales went down by more than 50%. It was decided that sales promotion and adding a new product would be the area of focus, which led to the question: “How can FroYo Cafe in Novi increase its sales and break even through below the line marketing and product development in the winter months?”Two fundraisers were held for FroYo Cafe’s sales promotions. The fundraisers were effective, as interviews conducted found that many discovered FroYo Cafe through the fundraiser and would go again. To increase participation, FroYo Cafe should work harder to promote the fundraiser. Through a survey, it was found that adding more warm products (hot chocolate, coffee) or adding edible cookie dough (a trendy product) would increase the customer’s willingness to visit FroYo Cafe.
I believe that below-the-line promotion and an addition of items to the product mix will help Froyo Cafe keep sales up during the winter, and eventually helping them break even. Action PlanWORD COUNT: 500Rationale for Study: Based on the feedback that I got from my mentor, it was decided that the problem for FroYo Cafe was sales. A goal was to increase sales and increase customer traffic. It was found that the best suited target market would be high schoolers, since they are loyal and generally the main purchasers of frozen yogurt.
The best way to attract students is through below-the-line marketing. Adding a new and trendy product into the mix may help the company fill a niche in the market and increase interest in the customers.Areas of the syllabus: Niche Markets ( 1.1)Market Research Surveys (4.
4)Questionnaire Below the Line Marketing ( 4.5)Word of Mouth PromotionSales PromotionsPoint-of-Sales PromotionProduct ( 4.5) Addition of a new product to the product mix Break-Even Analysis ( 3.
3)Possible Sources of Information:I have access to lots of primary data, one of them being financial information that my mentors have provided me with. A survey is being conducted, which will give me insight as to whether or not adding a new product into the mix will be beneficial for the company. Google Trends will be a great source to obtain secondary data. This is the fastest way to access a plethora of data about trends at the tip of your fingers.
Organizations and Individuals to be approached: I will be handing out my survey to high school students. This is to find out more about how to attract this demographic and if new products will attract them to FroYo Cafe. Important contacts throughout this process is Jason Smith and Dan Barr, as they both helped by providing financial data, resources and ideas. Methods used to collect and analyze data:I am going to collect primary data by using surveys, monitoring the attendance and sales of fundraisers, conducting interviews and obtaining financial records from my mentor. Most of my data is quantitative but I can get lots of qualitative data from the surveys and interviews.
I will analyze the data through Google sheets. I can analyze the secondary data through the graphs and information they offer. I plan on using the break-even analysis to find out if FroYo Cafe has broken even yet as this is one of our goals. I can do a before and after with the break even analysis and this can show the improvement over the course my partnership with this company. Anticipated Difficulties:I don’t expect to have many limited sources because my mentor is willing to give me any financial records that I need for my project.
I understand that my secondary sources, interviews and surveys won’t be fully rid of bias but what I acknowledge is that there is a chance of bias and critically analyze. Confidentiality isn’t too much of an issue, as my mentor knows that I will be showing my findings to my class. Gantt Chart:Before:After: Modifications occurred due to a lag in obtaining financial records and survey data. IntroductionThe number one question asked in the frozen yogurt industry is “How will we survive the winter?” This industry has intense competition like Menchie’s, Yogurt City, Yogurt Palooza and Orange Leaf, all located within a few miles of FroYo Cafe. As competition rises and the temperature drops, surviving is a struggle. The company that I am working with is called FroYo Cafe and is located in Novi, Michigan.
This company is fairly new and opened in the spring of 2017. FroYo Cafe, a business owned by Jason Smith, offers self serve yogurt with many unique toppings, smoothies and slushies. FroYo Cafe was successful in the summer, sales as high as $16,710 in August of 2017, generating high sales and customer satisfaction.
Heading into the winter months, they are worried about how they can keep up the business and survive. A goal for them is to break even, which is reasonable for a new business. Yet, for them to do this and survive they need to attract more loyal customers, increase sales and have more promotional methods. This prompted me to question “How can FroYo Cafe in Novi increase its sales and break even through below the line marketing and product development in the winter months?”Methodology and EmployedPrimary DataAs apart of my research, one of the objectives was to add a new product to the product mix. To determine whether or not this would be the right move, a survey was conducted with many quantitative and qualitative questions. I also obtained FroYo Cafe’s financial records.
This primary data is straight from the company and will help me look at their progress in sales and help aid this process.I organized two fundraisers at FroYo Cafe and during which we tracked the impact and reactions. Employees at FroYo Cafe have been tracking how many sales and people came for the fundraisers.
Post fundraiser interviews of a few of the participants were also conducted. This will aid in the reflection process by providing information about customers reactions. Secondary DataThe secondary information I received is from Google Trends. This source is helpful because it displays recent trends in Google searches with visualizations.
To determine whether edible cookie dough is a trend or not, I researched the trends in Google searches edible cookie dough and the regions. BiasI believe my information is valid but there is always an underlying bias. The surveys could have response bias, depending on whether or not the people who took them knew what it was for. There could also be bias due to the wording of my questionnaire or my tone of interviews. Main Results and FindingsSurvey and InterviewsOne of the key portions of my Internal Assessment is introducing a new product to FroYo Cafe to attract customers in the winter months.
Through my research from the surveys I held, I found that around 60% of a high school population, would prefer more “warm” items like hot chocolate. In addition, around 80% of a high school population would be interested in a Frozen Yogurt place selling edible cookie dough, a 2017 trend in the dessert industry that has intrigued many. Although this fun treat has been popular recently, there are only 2-3 locations in Michigan that sell it. This creates a ‘niche’ in the market.
Google TrendsThere are only a few spots in all of Michigan where you may find edible cookie dough. As seen in the graph above, ‘edible cookie dough’ has been google searched many times over the past twelve months in Michigan. These can be shown as the trends in the interest of cookie dough, which is now on the rise again. It was found that 51% of highschoolers get frozen yogurt once every month.Financial DataFrom the financial data, I found that FroYo Cafe made around $70,090 of gross profit from April 2017 – November 2017.
Still, their expenses exceed their costs and they need around $12,000 to break even. FroYo Cafe employees, during the fundraisers, recorded amount of people who attended the fundraiser and how many sales they made that day for the fundraiser. The count for the first fundraiser was that they had 34 supporters and made $150.
The second one had 4 supporters. Analysis and Discussion Market Research – SurveyThe survey collected has qualitative and quantitative questions in order to better determine if we should implement a new product. The main question that I asked was “Would you be interested in a Frozen Yogurt place that sells edible cookie dough?” I received many positive results from this question, them being aligned with what my mentor and I had hoped. We found that within the Novi high school population, 80% of them agreed that adding cookie dough to the menu would intrigue them and make them more willing to go to a Frozen Yogurt shop. I believe that this is due to the fact that edible cookie dough is a trend in the dessert industry and is very attractive. This trend is especially appealing in the surrounding areas because edible cookie dough is not readily available.
This fun treat has been popular for awhile now and would fill the niche market in the surrounding area. There are only a 2-3 locations in all of Michigan where you will find a vendor selling edible cookie dough. This is why the new addition of this product can be attractive and may bring many new customers to FroYo Cafe. I also asked about warm items and if adding them would increase interest in FroYo Cafe.
60% of students at Novi high school showed interest in the addition of warm items to the menu. Although this isn’t as high as the response for cookie dough, this is reasonable since warm items aren’t a niche and they are readily available at most cafes. In hope of eliminating bias, I didn’t mention the companies name. My hope was that a certain Frozen Yogurt place wouldn’t sway them more towards selecting a certain option.
This may have been slightly effective, yet many of my peers may already know about my affiliation with FroYo Cafe, which may lead to bias.Below the Line – FundraisersTo attract more high school students, the target market, we decided to increase our fundraisers. I have found that in many high schools across the country, a popular way to raise money for a school club or organization is through restaurant fundraisers. This is when a restaurant donates a percentage of that day’s profits to the organization. This encourages the supporters of the club or organization to go to this restaurant to not only support the group but also eat some great food.
After discussing with my mentors, we found that this would be a great way to attract high school students and to gain more loyal customers. We have held two fundraisers and they were a great success! The first fundraiser was a Michigan DECA fundraiser and brought around 34 new customers to FroYo Cafe that gave great ratings. FroYo Cafe made an average of $150 that day, which $75 of that went to DECA. The remaining $75 dollars went to FroYo Cafe. This was a higher than their average winter daily sales previously.
FroYo Cafe also received the benefit of new customers which were exposed to a new Frozen Yogurt store. The exposure is a huge non-financial benefit and can generate a positive word of mouth. The fundraisers brought a lot of attention to a business that wasn’t as well known in the high school community. I did a series of interviews after the DECA fundraiser and there was loads of positive feedback. Sarav Noor Singh stated that “I’ve never tried anything from FroYo and never really heard of it, but this fundraiser helped me discover this cool place.
” Another participant in the Relay for Life fundraiser, Alaysa Mixon, said, “I never knew that this place existed and I will be definitely going there more since I live so close to it.” Evidently, there are many positive responses and numerous people discovered FroYo Cafe while trying to support a local club. Break-Even AnalysisFroYo Cafe opened in this spring and did very well this summer; from June to August they made $37,103 in sales. However, they still didn’t break even in their efforts, as overall they are still at negative $11,869. As the colder months approached FroYo Cafe, it became difficult for them to attain a profit in their monthly sales.
Their summer average sales (June-Aug) were at $12,367 but their colder weather average (Sept-Nov) was $8,451. That means they had a 31.7% drop in sales, which will only get lower as you go into December through February. This is not leading them towards their year-end goal of breaking even in their first year. Although they currently don’t have the ability to break even currently, my results have shown very positive outcomes: the below-the-line promotion has received great feedback and the surveys say that implementing edible cookie dough would increase customer interest.
If FroYo Cafe continues to advance their efforts to increase their sales through sales promotions and fundraisers, then they may obtain more sales and recognition to this business. Additionally, if they implement the new product suggested, edible cookie dough, (or other warm products) they can increase their sales from other products other than frozen yogurt. In the winter months, frozen yogurt isn’t the go-to dessert and many people opt for warmer treats. The edible cookie dough will give FroYo Cafe some differentiation from other frozen yogurt places and, will hopefully, help them attract customers. Also, there will be some exposure to FroYo Cafe when they do release this new product since it isn’t as widely sold in this area.
Conclusion and RecommendationsThroughout this project the goal was to increase customer traffic to FroYo Cafe through implementing new products (edible cookie dough and hot chocolate) and below-the-line methods (fundraisers). With the primary data being financial figures, surveys, participation count and interviews I came to two conclusions:With the right promotion FroYo Cafe has benefited from an increase of new customers, more awareness of their store and increase in sales. I have found from my primary data that the overall sales increased when FroYo cafe sponsor a fundraiser. In the interviews that were conducted of the participants in the fundraiser, it was found that 50% of them they are likely to go back there.Through efforts to plan two fundraisers for FroYo Cafe, the first fundraiser was well advertised and had a very large turn out.
Despite our hopes, the second fundraiser wasn’t as successful and had a smaller turnout and the sales that day for the fundraiser were also low. This may have been due to the fact that Relay For Life doesn’t have as much of a supportive members as DECA does. I would recommend: FroYo Cafe and the organization work together to promote the fundraiser to the best of their ability and to generate a word of mouth. Implement a new separate menu of items for the cold season.
Through my research of adding warm items and/or edible cookie dough into the menu, I found that it is more beneficial if FroYo Cafe adds these new products to the menu, to increase customer traffic and sales. This would be a great way to increase interest in FroYo cafe, especially through adding new products that aren’t sold around the Novi Area like cookie dough. Overall, from the data I collected and received from the business, I recommend that FroYo Cafe continues to offer sales promotions and fundraisers to attract new customers and organizations. I also think that FroYo cafe should implement new products in the winter, especially cookie dough, which will help bring more customers since frozen yogurt isn’t as favorable or popular in the winter.
TOTAL WORD COUNT: 1981