Black Sheep Coffee Kerianne Gallagher Case Study Angelica Medici - - PowerPoint PPT Presentation

Black Sheep Coffee

Case Study

Angelica Medici Brooke Johnson Emily Westman Kerianne Gallagher Maria Hawkins Whitney Cash

Business background

The sole owner and manager Chance Ebersold, first entered the coffee industry working at “Mudhouse Coffee Roasters”

• ut of Charlottesville.

20 years later, after graduating school and various food service careers, he decided to open his own place. Chance found the perfect location at the corner of the Ice House in Harrisonburg while searching for a new spot for his wife’s boutique. He built Black Sheep Coffee in just 5 months and finally opened the place

• n April 18 2015.

Managing the new business was rough at first: machinery wasn’t as good and there weren’t enough tables and chairs However, Black Sheep has quickly become pretty successful, especially among the young students of the nearby universities. At Black Sheep customers can choose among a wide variety of coffees and homemade baked goods. The atmosphere is cozy and friendly. These two elements differentiated Chance’s place from the biggest coffee shop chains of the Harrisonburg area and were key to its success.

Culture

• Owner knew when he was young that he was an entrepreneur - wanted to be his
• wn boss
• Hires employees who have little to no experience in the food

business, that way they can be trained in the correct manner

• Food is made in-house - fresh and local ingredients.
• Employees decide what to make
• Atmosphere is relaxed and welcoming

Strategy

Quality Over Volume

• Black Sheep puts more emphasis on quality coffee and organic ingredients.
• Specialty coffees make more money and are better quality.
• Differentiated product from the franchised shops

Consumer Loyalty

• Customers tend to be more patient
• Word of mouth advertising
• Employee Empowerment
• Let employees decide what baked goods to make
• Does not require any former training

Five Forces

Threat of Substitutes (high)

• Other beverage types

○ Tea, water, milk etc.

• Other food options
• More specialty drinks
• At home espresso machines that make

specialty drinks

• Fast food Restaurants that produce

gourmet drink options in a shorter time frame Threat of New Entrants (high)

• Consumer base constantly changing

due to the many colleges

• Brand loyalty to other shops would be

the only deterrent

• Not financially difficult to enter the

market

• The product and environment are easy

to imitate

Five Forces Cont.

Supplier Power (high)

• Maintains supplier relationships with

suppliers that focus on unique and

• rganic coffee.

○ This will decrease once Black Sheep starts roasting in house and depends less on suppliers

• There are many roasters available to

choose from, but Black Sheep’s focus

• n quality and organic products creates

less choices. Buyer Power (low)

• Consumers do not have power to

negotiate prices

• Constantly growing consumer market

that customers have no control over pricing

Five Forces Cont.

Threat of Rivalries (moderate)

• Black Sheep focuses on a more high quality product that differs from competitors
• Smaller product line (rivals offer more)
• Longer prep time for Black Sheep products, consumers have to be more patient
• Suppliers and buyers have many other options to choose from; however the high

quality and specific product makes Black Sheep stand out

• High number of coffee shops in Harrisonburg, but downtown only has Shenandoah

Joe

Strengths

• Tons of variety through their small coffee

roasters

• Prioritize quality over volume
• Specialty coffee allows them to make

more money

• Customers are looking to support small

local business

• High traffic
• Strong social media: very visually

appealing, promote seasonal options

• Great customer service
• Food options for all times of the day

Weaknesses

• Chance is very happy with how the

business is progressing

• Location can be a bit of a challenge

○ Parking makes the coffee shop a bit of a walk, and it is located behind some businesses so it can be challenging to find ○ People mostly know about them through word of mouth

• Expenses, especially labor, are pretty

high cost

○ Try to compensate by increasing prices

• f their products

Opportunities

• Roasting their own coffee in house

○ Would not completely get rid of suppliers but supplement them ○ More cost efficient ○ Mostly consist of the decaf and cold brew coffees

• Would look to supply local restaurants with their own roasted coffee

Threats

• Shenandoah Joe’s

○ Opened 1 month after Black Sheep ○ Also in Downtown Harrisonburg

• A chain opening up nearby
• Not hard to enter the coffee business
• Changes in supplier prices (i.e. coffee prices increase)
• Pretty confident in their position currently due to their wide variety of products
• Most of the people in the local coffee business are really nice

○ Just into coffee ○ Very personal community

Marketing

• Does not use paid advertising
• Has website - http://www.blacksheepcoffeehburg.com/
• Social media - Facebook & Instagram
• Seasonal promotions - Example: Veterans discount
• n Veteran’s Day

Financials

• Chance checks numbers every day and compares them with previous

days/months

○ The numbers are constantly improving

• Highest cost is labor
• Has to sell a lot to be really profitable
• Working towards in-house roasting
• Is successful enough that expansion is an option soon