Eckhart Consulting Written Case

Applications Due: 6pm Sunday, February 12th

1 Case Setup RBC Coffee is a leading third wave coffee roasting company and retailer based in Chicago, Illinois. The third wave of coffee is a movement to produce high-quality coffee, and consider coffee as an artisanal foodstuff, like wine, rather than a commodity. RBC Coffee roasts coffee in Chicago and sells it at their branded retail locations across Chicago, Denver, and Dallas. They also sell coffee directly to third party coffee shops and in grocery stores. Currently, RBC Coffee has high brand loyalty from higher-end customers between age 20 and 40. As it expands, RBC Coffee is looking to both enter new markets and broaden their customer base, while maintaining the same core experience for loyal customers. Further, RBC Coffee wants to understand its current profitability and how it might be optimized. All the information needed to solve this case will be provided to you. Please do not use any outside information or research. All numbers are fictitious, and any inclusion of outside information might not fit with the fictitious scenario. If you make any additional assumptions, please make note of them. Do not feel compelled to use all the information provided - a successful answer will demonstrate the ability to recognize and disregard irrelevant information.

2 Exhibit: Beverage Trends (2005 – 2015)

This is from an article written on March 5th, 2016. Second wave coffee suppliers include Dunkin Donuts, Starbucks, McDonalds, Peet’s Coffee and the like.

00.51

1.52

2.53

3.54

4.5

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Ouncesconsum

eddailyperperson

BottledWaterSodaCraftBeerSecondWaveCoffeeThirdWaveCoffee

4 Exhibit: Coffee Distribution Channels

Chicago Stores Denver Stores Dallas Stores

3rd Party Coffee Shops Grocery Stores

Number of Locations 11 14 3 34 76 Total Lbs Sold - Ethiopian Single Origin 4,037 5,880 303 6,664 - Total Lbs Sold - Costa Rica Single Origin 1,364 1,456 570 13,770 11,400 Total Lbs Sold - All Beans 6,644 8,848 3,276 24,174 22,800 Total Coffee Sales 68,057 92,792 25,017 43,262 34,200 Average Cost per Location 5,766 6,174 4,767 545 705

All sales and cost figures represent monthly amounts.

5 Exhibit: Customer Feedback

“I love stopping at RBC Coffee on my way to Trader Joe’s or coming back from working out – it’s just so convenient!” -Katherine (41yo, Chicago)

“The Ethiopian Single Origin is such a great deal considering its quality and sourcing.”

-Robert (33yo, Denver)

“I’ve never been a big believer in artisanal coffee, but I have to say RBC Coffee’s pour-overs really are worth the price.” -Tom (26yo, Dallas)

“Better than second-wave coffee!”

-Bryan (21yo, Chicago) 6 Exhibit: Interview of Chicagoland Retailers The following interview was distributed among Chief Market Officers at four Chicago-based chains.

1. What does your company do and how long have you been there?

- Interviewee 1: I work at an upscale furniture retailer on the north side of Chicago. We’ve been doing business for over one hundred years, and I’ve been at the company since I left business school in 2005.

- Interviewee 2: I started a craft brewery with my sister about 20 years ago and in the past ten years have seen huge growth around different cities in the Midwest.

- Interviewee 3: My company produces bottled water and sells to businesses and other distributors nationwide. I started out at a midsize paper retailer based out of Scranton before transitioning to the company this year.

2. What differentiates your brand from other competitors in your space?

- Interviewee 1: We pride ourselves on traditional forms and styles. - Interviewee 2: We care about people who care about beer. - Interviewee 3: Our technology and reach keeps us on top of the water market.

3. How would you describe your ideal consumer?

- Interviewee 1: Usually we reach people who want to invest in a home they care about and want to be in for a

long time. A lot of our buyers are settled down with families. - Interviewee 2: Our ideal customer is a millennial with good taste, who appreciates good design. - Interviewee 3: We partner with businesses that appreciate our efficiency and low prices, and have the

leverage to bring our product to a large market.

4. Which marketing strategies have you found the most effective over the last five years?

- Interviewee 1: We use direct marketing and coupons to reach the majority of our customers. - Interviewee 2: We tried a ton of different channels, but really had luck investing in social media marketing

and from hosting events in a lot of the bars that sell our beers. - Interviewee 3: A lot of our new business partners come from conferences around the country and from

connections made for us by former partners.