Black Sheep Coffee Kerianne Gallagher Case Study Angelica Medici Maria Hawkins Brooke Johnson Whitney Cash Emily Westman
Business background The sole owner and manager Chance Ebersold, first entered the coffee industry working at “Mudhouse Coffee Roasters” out of Charlottesville. 20 years later, after graduating school and various food service careers, he decided to open his own place. Chance found the perfect location at the corner of the Ice House in Harrisonburg while searching for a new spot for his wife’s boutique. He built Black Sheep Coffee in just 5 months and finally opened the place on April 18 2015.
Managing the new business was rough at first: machinery wasn’t as good and there weren’t enough tables and chairs However, Black Sheep has quickly become pretty successful, especially among the young students of the nearby universities. At Black Sheep customers can choose among a wide variety of coffees and homemade baked goods. The atmosphere is cozy and friendly. These two elements differentiated Chance’s place from the biggest coffee shop chains of the Harrisonburg area and were key to its success.
Culture Owner knew when he was young that he was an entrepreneur - wanted to be his ● own boss ● Hires employees who have little to no experience in the food business, that way they can be trained in the correct manner Food is made in-house - fresh and local ingredients. ● Employees decide what to make ● ● Atmosphere is relaxed and welcoming
Strategy Quality Over Volume - Black Sheep puts more emphasis on quality coffee and organic ingredients. - Specialty coffees make more money and are better quality. - Differentiated product from the franchised shops Consumer Loyalty - Customers tend to be more patient - Word of mouth advertising - Employee Empowerment - Let employees decide what baked goods to make - Does not require any former training
Five Forces Threat of Substitutes (high) Threat of New Entrants (high) Other beverage types Consumer base constantly changing ● ● Tea, water, milk etc. due to the many colleges ○ Other food options Brand loyalty to other shops would be ● ● ● More specialty drinks the only deterrent At home espresso machines that make Not financially difficult to enter the ● ● specialty drinks market Fast food Restaurants that produce The product and environment are easy ● ● gourmet drink options in a shorter to imitate time frame
Five Forces Cont. Supplier Power (high) Buyer Power (low) Maintains supplier relationships with ● Consumers do not have power to ● suppliers that focus on unique and negotiate prices organic coffee. Constantly growing consumer market ● This will decrease once Black ○ that customers have no control over Sheep starts roasting in house and pricing depends less on suppliers ● There are many roasters available to choose from, but Black Sheep’s focus on quality and organic products creates less choices.
Five Forces Cont. Threat of Rivalries (moderate) Black Sheep focuses on a more high quality product that differs from competitors ● Smaller product line (rivals offer more) ● Longer prep time for Black Sheep products, consumers have to be more patient ● ● Suppliers and buyers have many other options to choose from; however the high quality and specific product makes Black Sheep stand out High number of coffee shops in Harrisonburg, but downtown only has Shenandoah ● Joe
Strengths Tons of variety through their small coffee ● roasters ● Prioritize quality over volume Specialty coffee allows them to make ● more money Customers are looking to support small ● local business High traffic ● Strong social media: very visually ● appealing, promote seasonal options ● Great customer service Food options for all times of the day ●
Weaknesses Chance is very happy with how the ● business is progressing Location can be a bit of a challenge ● ○ Parking makes the coffee shop a bit of a walk, and it is located behind some businesses so it can be challenging to find ○ People mostly know about them through word of mouth Expenses, especially labor, are pretty ● high cost Try to compensate by increasing prices ○ of their products
Opportunities Roasting their own coffee in house ● Would not completely get rid of suppliers but supplement them ○ More cost efficient ○ Mostly consist of the decaf and cold brew coffees ○ Would look to supply local restaurants with their own roasted coffee ●
Threats Shenandoah Joe’s ● Opened 1 month after Black Sheep ○ Also in Downtown Harrisonburg ○ A chain opening up nearby ● ● Not hard to enter the coffee business Changes in supplier prices (i.e. coffee prices increase) ● Pretty confident in their position currently due to their wide variety of products ● Most of the people in the local coffee business are really nice ● ○ Just into coffee Very personal community ○
Marketing Does not use paid advertising ● Has website - http://www.blacksheepcoffeehburg.com/ ● ● Social media - Facebook & Instagram Seasonal promotions - Example: Veterans discount ● on Veteran’s Day
Financials Chance checks numbers every day and compares them with previous ● days/months ○ The numbers are constantly improving Highest cost is labor ● Has to sell a lot to be really profitable ● ● Working towards in-house roasting Is successful enough that expansion is an option soon ●
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