Issues and challenges faced by the retailers of Big Apple Donuts and Coffee

1. The need of variety of ingredients to bake different and multiple types of

doughnuts made it hard to directly predict their profitability or going concern.

Big Apple Donuts and Coffee adopted a concept whereby they cater to diverse
customers’ flavours and tastes. Over the years, they have created over 30 different
types of flavours not including their seasonal products. This concept has led to several
ingredients supplies’ shortage or surplus. Without proper planning and budgeting as
well as analysis on customers’ preferences, many ingredients will go to waste which
is not profitable. This enables loss making. Although Big Apple could order their
ingredients in accordance to their monthly need which constitutes small portions of
different ingredients, this action would be costly in comparison of buying many items
in bulk portions. Buying in bulks are cost saving whereby vendors will even discounts
prices for having purchase in bulk. However, this act will cause surplus of ingredients
in their inventory. This would not look good in their financial statements and their
financial statements ratios will be of no use. In short term recording, it would seem
that Big Apple Donuts and Coffee are not profitable and their inventory turnover and
profit margin would show loss and not efficient. However, if they consistently make
profit over their sales monthly, in the long run, we could actually see if they are
profitable or not.

2. Open Kitchen concept

Big Apple sells freshly baked doughnuts and freshly brewed coffee in each franchise.
They conduct this process in an open kitchen where customers could see the baking
and brewing processes through glass walls. The risk of having an open kitchen
however would allow dangerous strangers to observe and steal their recipes, as well as
allows easy access of strangers or enemies to observe and destroy their machines and
items used by the franchise. Thus, each franchise has to install in their stores
surveillance cameras to monitor customers and workers actions.
Having an open kitchen as well would lead to workers or employees to always be at
the top of their work or job. They could not do any mistakes as it would deteriorate
the stores reputation. They have to keep their kitchen’s hygiene at par as well as each
employee’s appearance well presented. This caused major unnecessary criticism by
customers whom demands perfection and adds stress to employees to always have to
be at their best. Therefore, Big Apple should hire passionate and organized employees
to run their kitchen, and these characteristics can only be shown either through a good
resume or by them after being hired. These are the risk the human resource
departments and managers of Big Apple have to take when hiring workers.

3. Lack of online advertising

 Big Apple Donuts and Coffee although locates vast of franchises all over the country
and overseas, they still have yet to established a successful online advertisements.
Despite their success, the company do not have an easy mobile access or app to view
their site to make ordering easy and fast. In this internet and Wifi savvy era,
Generations X and Y contribute to the most number of buyers and consumer of Big
Apple’s doughnuts. Hence, the issue of not having a proper online marketing and
advertisements will turn off the ratings set by customers of generation X and Y.

4. Misconception that Big Apple Donuts and Coffee is an American brand

From the name ‘Big Apple’ itself gives a perception that their doughnuts and coffee
originated from The Big Apple, New York. The company’s logo presented New
York’s empire state building as the centre of attention. This instilled a mind-set to the
public that this company is an American brand. The issue of this misconception does
not give the Malaysian born and bred founder, Mike Chan, recognition towards his
success of having to open a successful brand of incorporating doughnuts into the
Asian culture. There were also several unnecessary speculations of having to
questions the managers of the company of why the company chose highlighting the
New York fast lifestyle instead of our local Kuala Lumpur hectic fast lifestyle.
Having to overcome the issues of public not recognising Big Apple Donuts and
Coffee as a local F&B company in Malaysia, Mike Chan spelled doughnuts as
‘Donuts’ in the company name giving it a Malaysian essence.

Consumer preferences and trends

As for doughnuts, the website set a three winning flavours which have over the years capture
buyers’ attention and taste buds. These doughnuts are The Alien (The number 1 most liked
and preferred by all consumers- the prefect mix and match of chocolate dip and fillings inside
out topped with chocolate curls), The Californian Almond (Taking the second place of the
most preferred doughnut by consumer- the perfect match between Californian almonds and
white chocolate as a majestic topping) and The Pink Twister (The tantalizing mixture of
strawberry chocolate and fillings inside out wins the hearts of consumer as the third most
preferred doughnut). Aside from this three, we surveyed few outlets in Malaysia, like their
outlet in 1Utama Shopping Mall, Petaling Jaya, their store managers claimed that The Ono
Oreo (Oreo’s cookies crumbles with cream topping and filling inside out) as the most bought
by their consumers. While the outlet in Midvalley Megamall, Kuala Lumpur claimed that The
Presidential Sweet and The Dandy Randy doughnuts at the most preferred doughnuts by their
consumers.

In terms of trends, currently tending in the Big Apple Donuts and Coffee is their ‘Domashi’
Sushi look-alike doughnuts as the most want to try by youngsters’ as well their éclair shaped
doughnuts. Big Apple Donuts and Coffee adds their seasonal doughnuts or new flavoured
doughnuts in accordance to the surrounding trends. As the Nutella Jam is trending nowadays,
Big Apple came out with doughnut flavours incorporating the Nutella Jam such as The
Donutella and as the season of durian fruit, Big Apple created The Duren Duren. They also
came up with a trend of doughnuts named after artists such as The John Lemon and The Al’
Pine.

Distribution Channel

Big Apple Donuts and Coffee used the direct approach as their distribution channel. They
manufactured (baked and brewed) their doughnuts and coffee at the open kitchen in all their
outlets and served them fresh to the customers. They do not have wholesalers or intermediary
channel between their manufacturers or producers to consumers. Their vendors however, are
mostly overseas vendors. They import most of their products but they do not disclose where
and what they imported as part of their company’s policy.