Second Cup

Coffee- case Study

Submitted By:
Group 8 -
Aakash Verma
Akanksha Gupta
Sanjay Ingawale
Sarvangini Singh
Vijay Tripathi
 Contents

1. Introduction
2. History
3. Problem Statement
4. Reasons
5. Structured Approach
6. Sample Questions
7. SWOT Analysis
8. Hypothesis
9. Solution approach
 Introduction
Second Cup is a Canadian brand that sells specialty coffee and
other food and beverages at over 325 locations across Canada
and a few locations worldwide. Founded in 1975, this brand
became a pioneer of high-end coffee, dominating the coffee
landscape in Canada. However, with the entry of Starbucks and
other competitors like Tim Hortons and McDonald’s meant that
the glory days for Second Cup were over.
 History
Second Cup’s value proposition was in delivering a superior
customer experience in an upscale setting. Although providing
good quality coffee was an important business goal, it prioritized
the overall experience of buying and enjoying the coffee at its
stores. Unlike other coffee brands, it built its reputation by
focusing on store experience, quality coffee and loyal patronage
through word-of-mouth promotion rather than traditional
channels of promotion.
 Problem
Statement
Its 2014 Second Mug Coffee – a Canadian
brand .Matt, who leads café sales comes to
you for help . His sales have fallen since
2012 . He doesn’t know what is the issue
but has data . He can tell you which cafes
have fallen, and which haven’t . He is being
compared to his peers who lead coffee pod
sales and powder sales, and they are doing
well. He also has data of cafes demography
– residential, office, mall, drive through, etc.
 Big Loss
At the end of fiscal year 2014, Second Cup
reported $26 million loss, including
provisions for café closings and a hefty
$25.7 million write-down of impaired assets.
Meanwhile, its year-over-year same-store
sales continued to decline since 2009 at a
steady rate of 5%.
 Structured Approach

1. DISCUSS 4. DIAGNOSE

5. FRAME AND
REFRAME THE
2. UNDERSTAND PROBLEM

6. PLAN
SOLUTION
ROADMAP
3. LIST SYMPTOMS
 Structured Approach -Discuss
• Whether his absolute sales have come down or growth of sales
comes down?
• is there any change in his business model of cafe running?
• Can we visit few cafes where sales have fallen?
• Can we discuss with Café managers ?
• Can we talk to some store managers, identify customer type?
• Is there anything done so far to improve the sales?
• Is he facing High attrition rates in café’s where sales has come down.
• Any changes in the marketing strategy for the Company compared to
peers?
• Does geographical and demographic factors has linkage with sales?
 Structured Approach –Understand / List symptoms
• Rise in competitors (Starbucks Corp, Tim Hortons Inc and, McDonald's
Corp opened a huge number of cafés)
• Huge debt
• Remodels and adjust its menu (thus cash was needed, and they
couldn’t afford costly renovations and high rents).
• Big Loss hence they were not able to bring sales.
• As market grows costumers need to have a bigger size of decision and
selection of menu which second up were lacking and there was lack of
stores and locations for Second Cup.
• Company is failing to support franchisees. The franchisees were not
happy with the low pay and suffering losses and the organization is
hence observing a declining number of these franchisees some of
which have experienced messy legal disputes a well.
 Competitors - Swot Analysis
Strength Weakness Opportunities Threats

Pods • Home • Set flavors Machines Compatibility

availability • Only at installed in issues
• Milk and home malls/ offices. with newer
other • Lack of machines
additives new-ness
self service
Cafes • A break, an • Outside of Start ups, home Ease of
outing home offices, accessing the
• Atmospher • Dress up Singles. Party brand
e and décor hassle location Price
seekers, sensitivity
housewife Cost of
groups locations –
Universities/ malls etc. vs.
malls residential
 Hypothesis
Hypothesis 1
Competitors play significant role Data Needed for H1
influencing coffee sales Demography of competitors café data

Hypothesis 2
•Menu plays significant role affecting coffee Data Needed for H2
sales Data required about menu at coffee house

Hypothesis 3 Data Needed for H3

•Vegan trend significantly affect coffee Data required about vegan preference at coffee
sales house
 Solution Approach
Ideas that Second Cup should consider to reposition the brand in this challenging and competitive
specialty coffee market are:

• Reduce cafe
expansion or
new opening
in upscale
residential
areas
• Increase café
footprint in
office areas,
universities,
malls
 Solution Approach
Positioning the brand inside a
consumer’s mind by becoming first in
any new product/service category.
Authenticating quality could be one of
the core values propositions of
Second Cup coffee market. The
coffee needs to be tailored to the
customer type, with time, cost and
quality paramount. Offering comfort,
community and a sense of extended
family to the customers. Every
customer needs special attention.
They need preference. Preference
brings loyalty and so does makes the
sale.
 Solution Approach
Customer nowadays has more
knowledge about coffee and the
customer who loves the coffee
product consists of specific
ingredients in their coffee-based
beverage and are willing to pay a
premium to get what they want. This
builds the interest in high-quality
coffee grew and potential customers
multiplied. speed of service also
helps to pull more people into the
stores and can became a massive
competitive advantage for Second
Cup coffee.
 Solution Approach
The desire for growth forced every
other competitor to expand quickly
through the franchising route as it
was the logical, quick and easy way
to raise capital. As Second Cup
Coffee was failing to support
franchisees. The franchisees were
not happy with the low pay and
suffering losses and the
organization is hence observing a
declining number of these
franchisees. Therefore, they must
control the entire supply chain and a
commo
Thank you