The Coffee Pot A Case
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While sipping her morning coffee Brook takes stock of all that has happened since her Dad
died. Giving into her family’s wishes she quit her job as a bio-chemical engineer and
moved back to Saskatoon to take over as President of The Coffee Pot. Sadly, things have
not gone well. The Coffee Pot was still losing money and Brook missed her father more
than ever. He had been a charismatic guy, who used to spend his days visiting and
playfully joking with The Coffee Pot staff while drilling into them his vision of how the
perfect coffee shop should be run. In essence, he wanted all Coffee Pots to be the same;
he felt people would pay a premium price to consistently experience the friendly service,
quality coffee, and an inviting atmosphere. Today, she thought, this was definitely not the
case, in fact due to high staff turnover it was rare to even be served by the same person
on successive visits to the same store. Her father founded The Coffee Pot in 2000 and had grown it to six locations in
Saskatoon and Regina. The Coffee Pot flourished up to the early 2010s, but had lost
money in recent years. Despite losing money, her father had not altered its strategy,
which was based on being located in spaces near shopping mall food courts and relying on
walk-by traffic. Realizing its strategy needed updating, Brook’s prioritized formulating a
new strategy. The first thing Brook did was a SWOT analysis. She quickly discovered that
The Coffee Pot could not compete with Starbucks, Tim Horton’s or McDonalds; it would
need to find another way to compete if it was to be successful. Fortunately, her Dad had
diagrammed a new brewing technology that would significantly reduce cost. Using her bio-
chemical engineering knowledge she built a prototype of his brewing machine, which she
called the cold mesamosis brewing system. After extensive taste testing, the new brewing
machine was declared a success; it brewed 10 times the amount of coffee from the same
coffee grinds without impacting the taste. In fact, the taste was as good in the tenth
brewing, as the first. With lower coffee costs assured, Brook could now lower the price of
coffee while still maintaining the same margin. Spurred by the success of the prototype, Brook immediately thought of patenting
her cold mesamosis brewing system technology and then selling it to other coffee shops.
Unfortunately, a patent lawyer informed Brook that it would be expensive to patent her
invention and the likelihood of successfully defending any patent infringement in court
was low. Given this, and the fact her mother was reluctant to sell her ownership share of
The Coffee Pot, Brook borrowed money from the bank to construct six machines, one for
each location. She then quickly installed them and introduced a narrow line of baked
goods in all The Coffee Pots. Lower cost coffee provided the basis for The Coffee Pot’s new
strategy: Lure price sensitive mall shoppers into The Coffee Pot by offering low price, fair
trade coffee served in a friendly way and then tempt them to buy high margin baked
goods. Brook had always been socially conscious so to help the environment and reduce
cost of disposable cups, The Coffee Pot strongly encourages the use of re-usable cups. In
addition, to retain the old customers and attract new customers to the shops, Brook
started a loyalty program, added prominent signage at the entrance of each shop that
brightly proclaimed the sale of fair priced, fair trade coffee in reusable mugs, and then ran
a number of ads on radio and Instagram. Satisfied she had developed a winning strategy and an effective way to promote it,
Brook then handed over execution of the strategy to the managers of the six locations,
and her exec team which consisted of Auntie Susan, The Coffee Pot’s self-taught
bookkeeper, and Jack, who was the Admin Manager whom her Dad had hired to help him
when his health was failing. Auntie Susan is responsible for the day-to-day bookkeeping,
payroll, taxes, payments, and inventory. Jack is responsible for ensuring employee
compliance with food and health regulations, purchasing supplies for each shop, hiring and
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By Dr.
Norman T. Sheehan, Edwards School of Business, U of S, published in Journal of Accounting Education
, August 2007. This version (C438 W12 Coffee Pot AB Case Dec11.doc) is from Dec20.
