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Segment: 19th -21st Irving St.

Professor Hudson

BUS 378 FINAL


PROJECT
TEAM

Ishaan: iverma@usfca.edu

Yehia: yaeissa@dons.usfca.edu

Bobby: bobby@allycarriers.com

Businesses covered
Underdogs: Bar and Taco shop
A-1smoke shop
UNDERDOGS
1824 Irving St, San Francisco, CA 94122

People contacted:

Max (Manager)

Dough (Owner)

John (Regular customer)

The neighborhood
Both our business area located in sunset are of San Francisco, specifically around Irving

street. The sunset neighborhood is dominantly filled with south-east Asian. The inner sunset

where are business reside the population demographics suggest it is 41% Asian, mostly

Chinese. The demographics are confirmed by the physical appearance and the vibe of the area.

Once you walk to the neighborhood it gives of a very strong China town like vibe. Most of the

business around the area are Chinese business, one can see Chinese board signs and also hear

a lot of mandarin when people are talking. In fact, during our visit we learned most of the shop

owners were only mandarin speakers. The Chinese presence in the area clearly mean more

Chinese customer centric business but the business we choose were very diverse and not

focused on customer group.


The average income of inner sunset household is $133,975 whereas the median average

of San Francisco is $103,801. This makes inner sunset safe to call an upscale neighborhood.

The average income of an area really tells what kind of people live in it and what kind of

business would flourish there. The median age of people living in the inner sunset is 45

whereby the city’s median age is 35. This indicates there is a lot of families living in the area.

Before starting our field work to locate and identify business we thought having a

general idea of the inner sunset would be better. All the demographics and stats above gave us

a rough idea of what people in the area would like and what can be successful. A lot of the

factors subject to customer loyalty, customer taste and liking, which is the key for a business

when choosing physical location. While our trip there we noticed trying to find parking and

the lack of parking space on the street clearly suggested that people come to the sunset specially

for the business around. Which is a good indication foe the business around. When we looked

at the business closely we saw there were two kinds of business one which were typical Asian

style day to day business like Asian market, local food places, laundry mat and other business

which run on a low budget. On the other hand, there are big business which are high budget

and try to catch people’s eye.

Discovering business
Our Interview process was one like no other. We started this project just thinking that

we would subtly explore the sunset area on our first try, little did we know that we would find

our business, and be able to meet head manager on our first day of our outing. After starting

on 3rd street and moving our way down we were really intrigued by how the vibe and style

completely changed right when you passed 19th. The traffic was probably ten times more than

any other part of the sunset. I had mentioned to Yehia and Ishaan that I was hungry so we

decided to just park and walk over. Like any other young kids’ active on social media we saw

underdogs had a good rating and we thought if we don’t get to meet anyone or have this be
our business for our project at least we could have a good meal. Little did we know that it

would all fall in place for us just the way we wanted it to. We first arrived at Underdogs the

taco shop, and the person serving us, ended up being the head manager, Max. Max had been

the manager, for quite some time and mentioned that he became Dough, the owner’s,

personal right hand/go to guy. Right away we knew this was getting lucky for us and Yehia

being the outgoing loud person he is, told Max right away that we were in fact here for a

purpose for a school project. However I chimed in and made it very aware that even though

we are here for a school project we had open authority to choose our own business and we

had a deep interest with Underdogs and we chose this place because we have already been

here and love the food and what better place to choose than one you already love. This tactic

seemed to work well, for Max was all for it and seemed eager to answer any questions we

brought his way.

Interview Process
Before even getting into the interview and the questions, we thought it best that we

first order something, seem very interested in the business, and not just look like a bunch of

kids trying to get their project over with. So, we each ordered some food, and after we

placed our order, max actually had brought over his dinner and sat with us. The setting was

so informal it was amazing for us. It didn’t even feel like an interview it was almost like we

just met a guy at a bar and we asked him to sit with us and we got to know each other. Max

was more than open to share information with us, it really helped him, that we mentioned

beforehand that we personally chose this establishment and as students were eager to

really know more about it.

After having a successful dinner with Max, he gave us his email and phone number

and told us the best way to contact Dough would be by email and he mentioned to make sure

that we CC him in the message so that way he can chip in and Dough would be a little more
willing to speak to us. Although the way Max had described him we really had no fear at all.

Yehia sent the email with Ishaan and me attached along with Max. within three days we got a

positive response, and Dough mentioned that max had already told him we would be emailing

him and was eager to sit with us and answer any questions we may have had.

Although we got a response right away, Dough was very hard to schedule a meeting

with, since his schedule was the most random and changing we had ever seen. Three to four

times in a row we experienced last minute cancelations with Dough because he had to catch

a flight to Alabama where he was opening up another restaurant or had to pick up his son

from school because his wife couldn’t or he had a random meeting pop up. He would however,

mention that we could ask him questions via email, which was nice, but it wasn’t the same we

really wanted a chance to sit with him and really get to know him.

Two weeks into our project we finally got to organize our schedule to sit with Dough

and when I say this was the best interview I have ever had. Dough is this guy that is just

always filled with so much energy and has the upmost positive attitude of all

time. In fact, he felt so honoured that we chose his business he had a Mexican platter ready

for us when we came in. Did I mention it was free of charge? Before we could even as any

questions Dough himself began to tell us the history of how he came about this place and how

he is doing all this for his young son. We even briefly were introduced to his wife who in her

own words, “Takes care of the things that Dough tends to be blind to.” It was really cool to us

how they made such a great team. From this we easily saw system theory being implemented

with work from non-family members handling the management and over look of service for the

actual family members taking care of the paper work and numbers to keep the place running.

Over all we were amazed at meeting such welcoming people. We felt like we did not just get

some good insight out of what it is like running a family business but we really made some

good friends in our journey with Underdogs.


Customer Interaction
On top of that we were introduced to a regular customer John. John has been a regular

customer ever since dough moved in and changed this place from a sushi bar to a taco bar.

John just went on and on about how loyal Dough has been and to his surprise was honoured

a leather engraving on the seat you usually sit at. John told us something that really stuck with

us. “If you want to run a restaurant it is not just about having amazing food, because Doug

nailed that, but every time I come here I feel like I am in my second home and I get treated

like royalty. Now that is what you call top notch customer service.” From customer feedback

to manager feedback we felt very honoured to have had this opportunity to deal with Dough.

Even from meeting him in person ourselves, all we felt were positive vibes and it really made

his project easier.

Industry challenges
Underdogs is a very well sorted and organized business but it still has a lot of

challenges. Dough, the owner feels he has special product which no one in the surrounding

blocks offer. There is not a lot of Mexican food spots in that area of sunset because of the

Chinese influence. The combination of sports, drinks and Mexican food make them a unique

place. San Francisco has no shortage of authentic Mexican food and that is a big fear for

Underdogs. They hold the geographic advantage as of now being in the sunset where there is

a lack of Mexican food. As we were talking to Max the manager he explained to us about a bar

which has started “Taco Tuesday”. Max sounded concerned if the new place starts pulling the

crowd. The increasing popularity of Mexican food in the US creates more opportunity for other

restaurants to open up, which is a potential challenge for Underdogs. The industry as a whole

is facing rise in costing in the city. From rent to wages everything in San Francisco is shooting

up and cutting profits for small business. Underdogs is trapped in the same circle of inflation
as well. The increase in living cost has hit Underdogs and other restaurant’s staff as well.

People with low wages prefer to move out of the San Francisco to save more money.

Local challenges
The arrival of Uber eats and Postmates have slowed down the traffic of people physically in

the restaurants. The food delivery apps have given more choice and freedom to customers

making the actual restaurant business slow. We were told during our interview that the whole

restaurant experience is spoiled by these services. Another issue is the sky rocketing rent in

San Francisco. The average rent in the city has risen from $2,450 in 2011 to $3,780 in 2018.

Underdogs have been facing the same problem as other residents and business are due to the

increasing rent. The increasing needs of staff is another challenge they face locally. The

amount of opportunities Silicon Valley has to offer, makes it harder for business to sustain staff

members.

Dough, the owner mentioned the challenges outsider investors bring into making

decisions about the business. The current restaurant is build according to sushi bar, which is

hard to operate in and disrupts the efficiency of the staff. Outside investors are reluctant to

renovate the place and that has been a growing concern for underdogs as a business.

Key Insight
One key insight that dough mentioned to us was straying away from investors.

He told us investors can really help with getting and sustaining capital but they always

don’t have what's best for the business in mind. He told us ultimately, he would like to

be 100% on his own without investors. Along with not always having the best interest

for the business, Dough also expressed it’s important to him to fully own his business.

He worked hard for what he has and doesn't want anyone else’s input or restrictions.
Recommendation
After gathering all of our filed research we have come up with a few recommendations

for underdogs taco shop. First, we would recommend that they seriously look into

reconstructing the bar. Because it was originally designed to be a Japanese restaurant,

it makes it more difficult for the employees to navigate their way around especially

when busy. Also, dough mentioned the lack of outlets, which is an issue for running

blenders and other equipment. Along with making it easier for the employees

remodelling the bar would also make for a more pleasurable dining experience.

Second, along with redoing the bar we also would suggest that dough look at venturing

away from the investors. Investors are always nice, but they can restrict what you want

to do with your business. One of these aspects would be rebuilding. From an investor

standpoint, why change something or invest money when the business is making

profit. But from an owner perspective it’s not ideal. We suggest bootstrapping for

funds instead of using investors.

lastly, we suggest that dough look into using food delivery apps. Food delivery apps

are not only customer friendly but great for exposure. We recommend that he look into

Grubhub and Postmates along with the Uber Eats he already has. Not everyone uses one app

so it’s good business to be on all. If dough makes these recommendations he should be to

grow off his existing business model which has been successful up to this
A-1 Smoke Shop
932 Irving St San Francisco, CA 94122

People contacted:

Jimmy (Owner)

Sarah (Customer)

Discovering business
As we deviated away from Underdogs from Dinner, on our first outing to explore the

sunset, we started to walk west to find our next business for our project. Yehia has a background

with working in Smoke Shops, so naturally right away he saw a smoke shop but it was pretty

hidden. We were hesitant at first because we really were not sure about using a business like a

smoke shop for our project we didn’t think that there was much that we could research about.

Our luck was really turning out for us that day. At the register was the co-owner, Jimmy.

When we first entered it was pretty overwhelming to Jimmy for three grown men come into a

15x4 shop, and ask you, “good evening sir did you have a minute to talk about your business?”

Probably not the best idea for us to use this approach since Jimmy had never seen us before
and it almost looked like we were a part of some government agency ready to write him a

ticket. I quickly changed the subject and he began to show me his flavours and when he got a

little comfortable with us we started to ease into some questions about his business.

Interview Process
When we first began we asked about ownership, and Jimmy had mentioned that his

whole family from uncles to aunts and extended cousins were all involved in the smoke shop

business and the Deli business. Jimmy mentioned the name of one of his cousins and Yehia

actually knew him. This allowed Jimmy to be a lot more comfortable with us and we were

really able to sit and have a real conversation. It wasn’t the best trying to schedule meetings

with Jimmy. We would ask him for his contact information and he was not willing to give it

to us, he just wanted us to come in whenever we wanted to come and talk, but for us that

seemed a bit odd being that we did not want to disturb him during business hours and that

lead to not being able to get the best answers we were looking for. In the end, it really did

work out. Yehia was able to roughly draw a genogram of the family to show us the

dominance they have over tobacco industry in the bay area.


With Jimmy, we were really able to bond through a culture stand point. Jimmy’s

issues with his dad in the family business setting were really similar to issues the three of us

faced with our dad, and this fact really brought us closer and allowed Jimmy to be more open

with us. Once we were able to show that we had an understanding of where we were trying to

come from it allowed Jimmy to build a whole different relationship with us in this project.

For him it was like, “Finally someone that gets me.” As the project went on we really noticed

Jimmy getting excited whenever we would come in, which to us would seem a bit weird

being that he still did not want us to have his contact information, but he would still love

talking to us and sharing issues in his family business especially with new laws changing for

tobacco and that is about to hit his business in a huge way. Our relationship became so great

that Jimmy since the four of us could relate about a lot of things. Out of this whole thing we

actually became really good friends with Jimmy to the point that we started giving him advise

on how to deal with issues in his family business and he would do the same for us. We were

also able to interview a customer named Sarah, who bought JUUL products. she told us that

she is not a big customer but comes here once in a while.

While discovering the whole business we all could see the conflict between Jimmy and

his dad. Systems theory was clearly visible to us. The overlap of family and business was

negatively affecting their efficiency at work.

Industry challenges
The tobacco industry all over the united states is facing major threat of banning JUUL

(electronic cigarette). JUUL sales for all smoke shops have been very high and is considered

to be a major product in the industry. Banning these products will cause huge revenue drops

for the smoke shops all over the country. As we were interviewing Jimmy, the owner of A-1
smoke shop, we witness a woman walking in and buying $200 worth of JUUL product. Jimmy

explained how the ban on this product will affect his business. The online accessibility of

almost all kind of products is also a threat for physical smoke shops. The actual shops have

seen a decline in walk in after the internet boom in the tobacco industry as well. The problem

of fake IDs and children trying to buy products is still a concern in the industry. A-1 is very

strict in that sense but they still see people trying to break the law which can affect the business

if FDA crack downs on the business.

Local challenges
The San Francisco county has been imposing strict laws and bans on flavoured tobacco

products. The ban will be active next year and lead to huge drop in sales. The San Francisco

government believes flavoured tobacco is deadly but on the other hand they have turned a blind

eye to the business dependent on these products. Jimmy was also concerned about the high tax

rates on tobacco products in California. California tax rate on a pack of cigarettes is almost $1.

On the other hand, states like Missouri is $0.17 per pack. People try to save money by buying

tobacco from other states and that hurts local businesses.

Jimmy faces a lot of conflict about operating with his father who initially started the

business. jimmy says he wants to intergrade technology like electronic billing machines but his

father is reluctant to do so. He also told us his father is against the sale of electronic tobacco

products which are trending nowadays. A lot of conflict between the family members leads to

less efficiency in the business.

Key Insights
After talking and getting to know jimmy he shared some key insight with us.

He mentioned that the relationship between him and his father wasn’t the best and
in recent years and has gotten worse due to the store. He went on to explain how they

used to bump heads but never like they do now. They never can see eye to eye on how

the store is ran and in turn is affecting their relationship at home. Jimmy expressed

that he wished their relationship was better but he has to do what's best for the store

even if that means upsetting his father. He also went on to mention how sometimes

his father and him would not talk for several weeks due to arguments over store

related issues

Recommendations
After our fieldwork and research, we have concluded what we think is the best

recommendation for A-1 smoke shop. First jimmy needs the figure out his

relationship issues with his father. Jimmy and his father clearly have a difference in

opinions on how the shop should be operated. Jimmy struggles with trying not to

upset his father but also with keeping up with the needs to expand the business by

bring in new products and equipment. If jimmy finds a way to keep his dad happy

and at the same time keep the business competitive, he will be successful. We suggest

trying to explain to his father that the smoke shop business is very different then

when his father got it started. Now a day’s smoke’s main business is in vaporizers.

It’s the latest trend in smoking and it’s is becoming increasingly popular.

Another recommendation we have is that they invest in advertising. Because

of the location of their shop it is hard for potential new customers to come in. we

suggest that jimmy and his father look into spending money on ad’s. if they

adversative more it will pull in more customers along with putting a spotlight on

their shop and will grow their customer base.


Lastly, we think they should look into focusing on a certain line of business

due to San Francisco’s new Tobacco laws. San Francisco implemented new Tobacco

laws that will restrict a lot of the products that A-1 carries. If they focus on one

product line it will allow them to be less affected by these new reforms. A-1 smoke

shop has a great business model and is located in a unique segment. If they work on

what we suggest they should greatly improve their customer base along with sales.

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