Terra Bite Lounge Company

Terra Bite Lay Company

Background

Terra Bite Lay is a coffeehouse which was opened simply by Ervin Peretz within Kirkland in 2006. The major peculiarity of this company is it has simply no fixed-price menu; rather, it allows the particular customer to figure out the amount of cash that will he/she desires to spend to the store (Cotte & Trudel, 2009).

Most importantly, this particular company depends on the particular principle of invisiblity; in other terms, they do not really understand how much every of the customers pays.

On the entire, this idea will be based on the particular premise that the well-to-do person, who appointments the shop, will be most likely in order to pay generously with regard to the services offered to him/her, which fee will create up for those individuals, who failed to spend too much.

This papers aims to evaluate the strengths and weaknesses of this particular organization and clarify the challenges that will it may encounter. Finally, it will be necessary to create recommendations which may improve the additional strategies of this particular enterprise.

SWOT Analysis

At this particular point, we require to discuss the particular internal strengths plus weaknesses of the organization, as well while those external aspects which might affect this later on.

Advantages

  • Decreased staff. Since presently there is no funds handling in this particular coffeehouse, the organization was capable to minimize the need for the personnel, particularly if we are talking about cashiers. In addition, this shop maintains only one barista per shift, which enables them in order to diminish labor expenses (Cotte & Trudel, 2009).
  • Attractive Payment Plan. Terra Bite Lay allows customers in order to pay for espresso ahead of time, so these people do not have got to take cash every time they go to this store. Additionally, it appeals in order to a person’s wish “to be good” (Cotte & Trudel, 2009). It details upon the man or woman self-esteem.
  • Good quality associated with the services provided to the clients.
  • Capability to forgo monetary transactions costs (Carroll & Buchholtz, 2008, p 897).
  • Weak points

  • Insufficient any kind of control mechanisms. The particular management of the organization is unable in order to determine how much cash is paid simply by the customer, plus how much he pays.
  • Low revenues through food sales.
  • Possibilities

  • Customer’s good attitude toward the company model and transaction scheme, adopted from the management of Terra Bite Lounge.
  • Risks

  • The intensity of the competition inside this particular business. At the instant, the forex market is dominated simply by such international firms as Starbucks, Diedrich Coffee, Kraft Food items, Nestle, etc. (Bacon; Mendez, & Gliessman 2008). These businesses can set lower prices for their items and services, whilst Terra Bite Lay cannot do this.
  • The particular changing demographic styles in the usa. First, 1 has to make note of that will Terra Bite Lay serves the requirements associated with affluent communities within which people are usually more inclined in order to behave responsibly. The particular company started within 2006, and in time the transaction scheme, proposed simply by Ervin Peretz has been quite successful.

    he continuing economic recession has considerably diminished the buying capacity of numerous people, in fact it is very probable that a few of them might take benefit of Terra Bite Lounge.

    Furthermore, one has to take into consideration that the United states population is constantly growing, mostly credited to the inflow of immigrants through developing countries (Sharpner, 2007). These individuals can visit this coffeehouse, however, not all associated with them will become able to spend.

  • this individual ongoing economic economic downturn has significantly reduced the purchasing capability of numerous people, plus it is very probable that a number of them may take benefit of Terra Mouthful Lounge.

    Additionally, you have in order to take into accounts that the United states population is continuously growing, mostly due to the inflow of immigrants from developing countries (Sharpner, 2007). These people can visit this coffeehouse, but not all of them will be able to pay.

    The key issues

    Now the management of this coffeehouse has to answer several important questions which are crucial for the development of further strategies. First of all, they need to determine what kind of customers they need to target. They need to know their age, residence, and values.

    Secondly, the administrators have to decide whether the existent payment scheme is fully suitable for Terra Bite Lounge, given the current economic situation in the country.

    Last but not least, the managers of this company need to know what exactly attracted the customers, for instance, the idea of mutual trust, the simplified procedures, the quality, and variety of products and services and so forth.

    Their main task is to learn more about people’s perceptions of the pay-what-you-want system.

    Opportunities and alternatives

    Before opening a coffee house in any area, the management should collect as much information as they can about the community. In particular, they need to focus on the following data:

  • Level of unemployment and average income level;
  • The number of coffee shops in the given area;
  • The attitude of the customers’ toward the idea of a pay-what-you-want shop. For this purpose, the company will have to interview their current customers in Kirkland as well as their potential client.
  • The management can choose from the following options.

    They can open a shop in a small but affluent town like Kirkland and retain the original payment system. The positive aspect of this approach is that the company will still retain its uniqueness, but it will receive sufficiently less profit than traditional coffeehouses like Starbucks.

    The second strategy is to switch to a traditional priced-menu. In this way, the company is going to be able to increase their revenues from sales, but it will no longer stand out among other coffeehouses.

    The third option is to establish a prepay system that allows a customer to buy coffee or confectionary beforehand. For instance, he/she can pay the company a certain amount of money in advance, during the next visits to the shop. This person will not have to take cash or credit card.

    However, to implement such a prepay system; the company will have to acquire new computer technologies.

    Recommendations

    Among these options, the third one is apparently the most effective. There are several reasons for it. First, it will enable the company to avoid those clients who are reluctant or unable to pay for goods and services. Moreover, the responsible patrons will not feel that they are paying for someone else.

    The second point that we need to consider is people’s attitude toward the so-called pay-what-you-want system. Certainly, it may appeal to the visitors because it is based on the idea of mutual trust; however, it also involves some stigmatization of a person.

    For instance, a regular visitor of Terra Bite Lounge may be labeled by others as someone who cannot afford a decent meal or drink. In popular opinion, the pay-what-you-want shop can be associated with poverty and low status in society.

    Of course, it is a stereotype, but it can greatly affect the decisions of potential clients. In contrast, a prepay system will reduce cash handling to a minimum and will make the clients feel much more comfortable.

    Reference List

    Bacon. C. & Medez V. & Gliessman S. (2008). Confronting the coffee crisis: fair trade, sustainable livelihoods and ecosystems in Mexico and Central America. Cambridge: MIT Press.

    Caroll A. & Buchholtz A. (2008). Business and Society: Ethics and Stakeholder Management. NY: Cengage Learning.

    Cotte J. & Trudel R. (2009). Terra Bite Lounge: Pay What You Want Café. Ivey Publishing. pp 1-4.

    Sharpner. S. (2007). Demographics of the United States. NY: Nova Publishers.

    Terra Bite Lounge (2011). Press Notes. Available at: http://www.terrabite.org

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