Our client, the owner of the 8:10 cafe, would like to increase her revenues. We have been asked to find additional revenue streams as well as making it easier for the customers to pay for items immediately versus the traditional IOU system or worse the five finger discount mode of payment. Please help us with this monumental challenge!!
1. Implement Pay Pal system (more revenue, easier access for customers). Have formal 8:10 tabs to complete and turn in. Erika sends out Pay Pal invoice at the end of the month. 2. Install ATM inside the cafe. This will allow those without cash an opportunity to complete purhases and will cut down on th large amounts of IOU's, which is currently around 30% of purchases.
3. Sell Cigarettes to increase revenues.
I'm not sure what the problem that you're trying to address is, but I'm guessing that the client wants to increase revenues?
ReplyDeleteI like the ATM/PayPal idea, because a common reason that I sometimes don't purchase there is that I don't have cash. However, I doubt that I would use an ATM there unless it was from my bank b/c of the fees. AN alternative would be to accept payments with debit/credit cards, or the Vandy ID card.
Other options would be to sell real brewed coffee (and to perhaps offer a discount for using refillable mugs), and/or to provide additional food options (sandwiches/salads, etc). Perhaps you could team up with Steve, Ann, and Astrid and suggest that she team up with the Mediterranean restaurant.
I like idea 2 best. There was an ATM outside the cafeteria at one of my former workplaces, and many people used it because it was so convenient. I agree with Jeremy, though, that I wouldn't use it unless it was from a bank that didn't charge me fees.
ReplyDeleteWhile I think using Paypal is an innovative solution, I'm not sure that students would want to take the trouble to log into Paypal each time they purchased something. Also, people are usually grabbing a snack or drink right before class, and might forget to pay via paypal. The cash box in front of you is a better reminder to pay as soon as you purchase something.
I think that #2 is probably the most viable. While you would lose out on SOME business because people want to avoid the fees, these are people that wouldn't be purchasing, anyway. Also, where's the nearest ATM? At the law school, where most people would rather eat, if they want to use a debit card...
ReplyDeleteI really like your first idea, but just am not sure how much work this entails (will it be sustainable or just a great thought for this year).
ReplyDeleteThe second idea is also really nice as I know it has been a problem for myself in the past (and definitely the future, unless you guys pull through).
The third thought might increase revenues, but if the smokers have figured out where to get cigarettes up to this point (across the street at CVS), they probably will be fine in the future (especially if prices differ).
In any case - I am excited to see what you all come up with - good luck!
I like idea #2. I have on many occassions wanted to get something to eat at the 8:10 cafe, but did not have the cash on hand to do so. However, you have to consider if an ATM makes sense because of the downtime in the summer months. I am surprised that you did not come up with a better third option. It seems to me that offering a greater variety of healthful foods like Bananas or apples would make a profit. Also, Metrx Protein shakes or Acai (exotic fruits) juices might make sense.
ReplyDeleteFirst of all : I am shocked!!!! to hear that 30% of all payments are IOUs.
ReplyDeleteI would love having an ATM at school, not only to be able to purchase at the 8-10 Cafe, but in general. Conincidentally, today I wanted to buy a muffin, but did not have enough cash with me and was desperately trying to figure out where to get the $2, since there isn't an ATM. In the end I did not purchase anything, so I think it would help ultimately.
I strongly oppose the cigarette sales unless, alcohol sales are permitted as well. Both will bring up ethical, as well as legal implications. In addition, it might attract external customers that are not necessarily obeying the honor system.
The first idea is my favorite. I would think that you could really increase revenues because there are lots of times that I don't have money so I don't get something or I run across to CVS.
ReplyDeleteI'm pretty sure you could get one of those coffee machines that companies have in their break rooms that has the option for good coffee, hot chocolate... and whatever else. That would be easy and probably profitable because its probably a machine that you can lease or something.
I agree with the above statements that number 1 is the best; however, this entails the owner having to do a significant amount of additional work (invoicing, collections, ect.). Have you guys considered a pre-pay system where someone could load up on IOUs? Maybe a coupon book given in exchange for $20 which could be torn off and used as cash in 810? This could be included with a discount for larger pre-pays to encourage spending and eliminate the need for a lot of additional work.
ReplyDeleteI love the second idea and I think people who had the same experiences(either without cash in hand or without small changes)would be in favor of this idea. No doubt that idea #1 would create additional work and cost for the business.
ReplyDeleteAnother idea came up into my mind is: is that possible to deposit some money in the Vandy student card in advance and then you can use it as a credit card within the campus(if the univeristy has this kind of system)?
As an alternative to idea #3, I really like the idea of having more fruit options to the students and faculty here.
My favorite of your ideas is the ATM option, but think minimal fees or no fees will help utilization. It would be great if we could use our Vandy cards on the spot, similar to the PayPass system that Mastercard uses.
ReplyDeleteDo you have an issue with repayment on the IOU's? Do you encourage or technically allow IOU's? I didn't really know this was an option! Maybe you could charge a slight premium/interest fee for using the IOU system.
I miss a true 'lunch' option. I'd love to have a chicken caesar or greek salad to grab and go; or a plumgood lasagna! The ATM is highly needed! One thing about the vandy cards- you can preload them; and then super easy to reload them by adding more$ online- which is then billed to you. Its a good option and does encourage spending (I know from the 8-diet coke-a-day-addiction I developed in undergrad because it was so easy to swipe and go!)
ReplyDeleteword of caution: The vandy cards also work on the vending machines in the back of 810- so its very close competition.
Even simpler than PayPal, 8:10 should accept the Vanderbilt Card. We should be able to put money on our cards in the Library and just swipe the card and digit the amount of our purchase.
ReplyDeleteTo increase the revenue and to cut down the large amounts of IOU’s, the owner of the 8.10 café should ALWAYS leave some change. Indeedn, frequently, there is no change and when you have a $10 note, you have only two options: you don’t buy anything or you use the traditional IOU system!
ReplyDeleteSelling cigarettes would only increase revenue if you sold them at a discount compared to the new discount store that went in at the corner of Broadway and Division. Plus, you need to think of the image constraints that Owen would be concerned with. Also, will the university actually let you do this? I like the ATM idea because I am always going over to the law school to get money. Sometimes I just pass on buying something because I don't have enough cash and I do not want to go over the the LS.
ReplyDeleteSome issues:
1. Only having $20 to pay and there not being enough change
2. Space
3. University rules
4. Time to implement
I agree with Astrid. Scrap #3. We don't need to create ethical issues when there are plenty of other ways to earn revenue. Install the ATM.
ReplyDeleteOne of my groups is working with a new community bank in town: Avenue Bank. They refund all ATM fees. If you'd like, I can give them a call and maybe we could create an alternative for those students who don't want to use their Vandy card. They can join Avenue and not have any fees.
I like the idea of installing an ATM. If the 8:10 owner wants to increase revenue, it would take a capital expenditure to purchase or lease the ATM. There is an opportunity to recoup the expenditure and gain addt'l revenue via the service fees. All atm's have them, and they are effectively convenience fees. If it is lower than the current national avg of $3 (which most nationwide banks put into effect this month) it could potentially be viewed as a bargain.
ReplyDeleteMy only concern with selling cigs is that I would think there are federal licensing issues with the ATF.
Also, I agree with Alena that if you use PayPal, you are effectively issuing credit. It seems like it would be easier to get ppl to pay the $1 here, .75 there rather than be shocked at seeing a tab due of $20 dollars at the end of the month.
Interesting problem! Can often be harder to innovate on something we all know so much about. Anyway, here goes...
ReplyDelete#3 is pretty much a non-starter. Beyond the legal, health, tax, and policy implications for the university, cigarettes are a very attractive target of theft (small, high-value). And you've suggested that the 5-finger discount is part of the problem.
#2 would make sense. I currently go over to the law school to use the ATM. I could imagine your group talking SunTrust into putting a machine in Owen (if you were to take them a petition signed by a significant proportion of the 400+ bodies that inhabit this building and who have SunTrust accounts). Could make it easy for them.
8:10 would have a different problem, though - since the cheap machines only give out $20-dollar bills, the 8:10 will have to be making a lot of change. Still, cutting the IOU rate would be a good benefit.
If they switch to a paypal type system, they'll need to be sure to think through the behavioral dynamics of how purchases are made. I think you have a great point in the formal "tabs" mechanism. My question would be if people are more likely to under-report on a tab system than they are to underpay with cash. Not sure if this is an issue (underpayment) but could see it as an issue.
Some kind of scanner system would seem to be another approach. People seem to get it at grocery stores - could you do a system where they scan the item and then scan a barcode label they've put on the back of their student ID. That way 8:10 could get easy accounting and you avoid the problem of people putting things on one-another's tabs. http://www.barcodediscount.com/
How will your proposed solutions affect the perception of Owen culture - currently outsiders are impressed that the system exists... Would any of your proposed solutions support/contradict that perception?
Just my 2 cents! Good job and good luck!!
What I like about the two first ideas is that they both address the problem that people are often low on cash. I like idea number 1 even though it requires that people have the paypal system as I don't think people will want to start one just to pay a small tab at the 8:10.
ReplyDeleteIdea 2 is very good and I think this is something a lot of students have missed at school. However, I know that in my home country ATM machines are very expensive to buy, definetely out of 8:10s current capital reserves. The question is whether or not the school could be willing to invest in this.
Idea 3 is a good way to increase revenue, it is definetely a product where the mark-up is a higher. However, it is also important to remember that though selling cigarettes might not be conseredd controversial, it is a strategy that people might be opininated about.
I think #1 and #2 would both help your client deal with her stated desire to reduce IOU's and theft. They would also both provide a great service to the students (especially the ATM!!).
ReplyDeleteThat being said, I'm not sure they address the issue of increasing revenue in the cafe (unless the cafe gets a share of the ATM charges). I think that one of the biggest complaints students have is the lack of decent lunch food in the cafe. Bringing in fresh food daily (even pre-made sandwiches) would probably provide the most immediate boost to revenues.
I must agree with my friends: idea number 2 seems to be the best. Not only would an ATM help students in the cash-only 8:10 Cafe, it would also make the Cafe more of a destination for students. Currently, 8:10 is more of an afterthought or library-alternative. If the proprietor would like to increase revenues, creating a more friendly, more self-service environment certainly can't hurt.
ReplyDeleteAs for idea number 3, I'm not sure you can sell cigarettes self-service. Seems wrong, doesn't it?