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Pub Case

By gloriayang Jan 15, 2013 9227 Words
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The Pub: Survive, Thrive, or Die?
Gina Grandy, Mount Allison University
Moritz P. Gunther, Mount Allison University
Andrew Couturier, Mount Allison University
Ben Goldberg, Mount Allison University
Iain MacLeod, Mount Allison University
Trevor Steeves, Mount Allison University

I

t was midnight on a Friday night in the middle of April 2008, and Mount Allison University campus was alive. The Pub was filling up. Patrons waited in line for twenty minutes, had their identification cards thoroughly checked, and entered into the basement-level facility. The music was pumping, the strobe lights were moving, and the dance floor was crammed. It was going to be another entertaining night at The Pub. Behind the bar was a familiar face—Jonathan Clark—known to everyone in town as Scooter. Scooter had been The Pub’s regular manager since 1993. Students and alumni would remember him long after they had forgotten their grade point average. On that particular night, Scooter’s thoughts were elsewhere. He was thinking about the board meeting held earlier that week. The board talked at length about The Pub’s financial situation and the need to change how it did business. The Pub had experienced financial difficulties for several years, although the current year had been financially sound. The likelihood of The Pub remaining profitable in the future was unclear. Competition among bars had increased as alcohol consumption patterns in Canada changed. The Pub had a special connection with the student base as their campus pub, but students were fickle and quick to move on to a different bar if it offered something more appealing. The Pub was set to move to a new location on campus in August 2008, and the board and Scooter needed to determine the most appropriate business model to ensure its survival. Scooter needed a plan to bring back to the board at the end of the summer.

THE CAMPUS
Officially known as The Tantramarsh Club, The Pub was formed in 1974 at Mount Allison University (Mount A) in Sackville, New Brunswick, Canada. The town of Sackville was located in southeastern New Brunswick, in the middle of the Maritime provinces of Canada. The town bordered the province of Nova Scotia. Sackville’s economy was driven by tourism and the staff, students, and visitors of Mount A. Sackville’s

Copyright 2010 by the Case Research Journal and by G. Grandy, M.P. Gunther, A. Couturier, B. Goldberg, I. MacLeod and T. Steeves. The authors would like to acknowledge the help of Tupper Cawsey and three reviewers. An earlier version of this case was presented at the Atlantic Schools of Business Conference held in St. John’s, Newfoundland, Canada in 2008.

The Pub: Survive, Thrive, or Die?
This document is authorized for use only in Strategy and the competitive environment by Dr Ioannis Thanos at HE OTHER from January 2013 to July 2013.

1

population was comprised of approximately 5,000 residents and a university student base of an additional 2,000 people.
Mount A was a public university and employed approximately 180 faculty (30 part-time and 150 full-time) and 340 staff (50 part-time and 290 full-time)1. The university’s target enrollment level was 2,275 students. The university administration deliberately controlled enrollment at this target number to ensure students benefited from the close-knit nature of relationships with students, staff, and faculty. The university experienced a decline in enrollments in 2004–2005 that took four years to work through the system. Enrollment levels were approximately 2,200 in 2007–2008. National trends indicated that between 2001 and 2011, undergraduate enrollment would increase by 34 percent. Data showed that 85 percent of all full-time students were enrolled in undergraduate programs. These rising participation rates were attributed to (1) an increasing number of university-educated parents influencing their children to attend university, and (2) students’ perceptions that a university degree would result in a higher paying and more rewarding career.2 National trends also indicated that males represented 42 percent of total enrollment at universities.3 This national pattern was also evident at Mount A where female enrollment made up 61 to 64 percent of total enrollment in any given year. Mount A was primarily an undergraduate university with more than forty distinct programs. The university offered bachelor’s degrees in arts, science, commerce, fine arts, and music, as well as master of science (biology and chemistry) and a certificate in bilingualism. Mount A ranked as the number one undergraduate university in 2007 by Maclean’s magazine. The university achieved this number one position twelve times over a seventeen-year period.4

Founded in 1839, the university was known for excellence in liberal arts education. There were more than 140 clubs and societies (e.g., Bio-Med Society, Commerce Society, Coalition for Social Justice, Garnet and Gold Musical Theatre Society, Judo Club), a campus theatre, a visiting performing arts series, and numerous concerts (often performed by students and faculty of the music department). University constituents were also actively involved in community-based activities in Sackville. The university had a strong alumni base and there were more than thirty chapter locations across the world. The university held two significant on-campus events annually: the reunion weekend in May and the homecoming weekend in September.

TRACING THE PUB’S ROOTS
The university established regulations in 1968 that permitted students to consume alcohol on campus. Mount A’s governing body approved the formation of a campus pub in 1973 but it would operate as a separate entity from the university. The Pub’s financial year did coincide with the university’s financial reporting year (May 1 through to April 30). The Constitution, originally approved on November 2, 1973, outlined the purpose of The Pub as:

. . . fostering and promoting artistic, literary, educational, social, recreational, and sporting activities for the advancement of the interests of its members and others; providing a club room and other conveniences and facilities for members and guests; promoting social and friendly intercourse among its members and guests; and, affording opportunities for informal conferences on all matters of common interest.5

Most campus pubs were non-profit entities operated through university student unions. The Pub at Mount A operated separately from the Student Administrative 2

Case Research Journal • Volume 30 • Issue 1 • Winter 2010 This document is authorized for use only in Strategy and the competitive environment by Dr Ioannis Thanos at HE OTHER from January 2013 to July 2013.

Council (SAC) and had its own insurance and financial reporting. Over the years, The Pub and SAC organized joint events and benefitted from cross marketing but in general, income generated by The Pub rested with the management of The Pub. The Pub’s net profits were re-invested into operations and facilities or held as savings. The university signed a formal agreement with The Pub in 1984 to more clearly outline the relationship between the two organizations. The university appointed a senior administrative official to The Pub board. The director of administrative services, Michelle Strain, assumed this responsibility. Strain indicated, “The Pub does not operate fully at arm’s length. The University has some input into decisions of The Pub.” The university’s lease agreement with The Pub read, “The university has a vital interest in ensuring that the operations of the club within the premises will not create an adverse reflection of the university.” The Pub existed at the discretion of the university. The university dictated whether or not The Pub was to purchase new appliances or engage in other upgrades to reflect the university’s intended image to potential students, visitors, and the public at large. The Pub’s lease could be terminated if its management did not comply with the requirements set by Mount A’s administrators and board of regents. Within a year of opening, the directors of The Pub employed a full-time manager to handle all operational issues. The manager’s duties included, staffing, inventory control, cash reconciliations, bank deposits, liquor purchasing and pickup, security, maintenance, cleaning and equipment maintenance, payroll, accounting assistance, recordkeeping, public relations, promotions and advertising, music/entertainment control, and regular operational maintenance of the third-party ATM machine. The manager acted in a similar fashion as an owner/operator would in such a small organization of approximately twenty-two employees, twenty of whom were part-time student employees.

A WORN BUT ADORED PLACE
The Pub was located in the basement of the University Centre on the north side of campus. Access via a treacherous staircase meant that students with disabilities had difficulty entering The Pub. No signage appeared on the exterior of the building, but most individuals on campus knew exactly where to find it. The Pub symbolized tradition and for former and current students it was a nostalgic place. A vibrant overhead mural on the entrance staircase corresponded with the interior décor. Walls were also painted with colorful murals depicting political and social scenes. Small round tables, painted like the rest of the facility, dotted the premises in no real order or form. A small coat check was at the entrance, covered with pictures of patrons from years gone by. A long, thin, cramped bar stretched the length of the room, with clear signs stating, “Order in this Area.” There was one cash register and this slowed down ordering, despite the best efforts of the employees. A maximum of two bartenders served customers. On some nights The Pub set up a second bar in another corner of the club as a remedy to address slow service.

A DJ booth overlooked a dance floor to the left as patrons entered the facility. Speakers surrounded the DJ booth and pool tables were located in the back area. The ceiling was exposed, allowing all who entered to notice the piping and ventilation systems. The majority of the floors were covered with old, stained carpet and the rest with bland tile. This was The Pub, and despite its run-down appearance, it had been the adored hangout of Mount A students for decades.

The Pub: Survive, Thrive, or Die?
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3

Fire regulations limited The Pub’s maximum capacity to 175 patrons. Long lines were common on nights with special entertainment, and on Friday and Saturday nights in general. Customers’ most frequent complaint was waiting in line at The Pub. The development of a new University Centre on campus meant The Pub would move to a new location later in 2008. Strain indicated, “there was a campus facility master plan done in 2001 and the decision was made to move all student-related functions over to one student centre. So, all non-academic services including the radio station, bookstore, cafe, pub, and registrar’s office will be located there. As a part of that plan, a building on campus, Trueman House, was selected to be renovated because it is in the student services zone with the athletics building.” Scooter indicated that moving The Pub would be bittersweet for staff as there was both anxiety and anticipation. There were still uncertainties with the new location. There would be a new layout and employees were concerned about the size of The Pub and the absence of a permanent DJ booth. They also worried that the culture and working environment would change with the new location. Strain noted, “People are apprehensive. The old Pub is falling apart. There are leaking pipes, electrical issues, sewage back-ups and a few things not up to building code. On the one hand, students know it has to move to a new building with new facilities. One big factor in people’s minds is the size. The Pub is now 3,300 square feet and the new Pub will be 2,800 square feet. And so, that 500 feet has become a big issue for quite a few people.” However, the new Pub did provide new opportunities. Scooter stated, “It will certainly take a bit of time for us to become accustomed to a different bar layout, but the new bar presents an opportunity for greater efficiencies in serving customers, especially since we will be able to have more serving stations in place.”

THE MOST SOCIAL WORKPLACE ON CAMPUS
All employees of The Pub were students, except Scooter and the doorman. The staff considered The Pub to be the most social workplace on campus. Promotions manager Chris Grove pointed out, “it helps build another side of students’ education here at Mount A.” Employees were offered drink discounts on nights they were not working, were allowed to walk past lines, and shared tips equally (regardless of position) amounting to $300 or $400 per individual annually. Scooter donated his share of the tips to charity. Most employees moved between positions depending on what needed to get done. No formal job descriptions existed. Generally, hiring occurred in early September and January, followed by several weeks of training for newcomers. If the Pub needed more staff during the year, further employees would be hired. Scooter expressed, “we’ve always tried to purposefully aim for the broadest possible selection of students during the hiring process. In terms of gender, the split is fairly equal. In terms of academic standing, there is a heavier emphasis on upper-year students, although we try to hire students in their second year to minimize turnover. We try to have at least one member of each of the four or five biggest varsity sports teams and rugby clubs, at least one student from each of the dozen most popular areas of study, members of most of the biggest campus extra-curricular bodies and charities, several students who speak multiple languages, a few international students, and a few students with diverse sexual orientations.” The full-time management and DJ positions required extensive training of at least one year and replacement was difficult, as individuals graduated and left the university. Scooter indicated that retention was the biggest challenge to The Pub given its

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Case Research Journal • Volume 30 • Issue 1 • Winter 2010 This document is authorized for use only in Strategy and the competitive environment by Dr Ioannis Thanos at HE OTHER from January 2013 to July 2013.

employee structure. As a partial remedy, the board was considering hiring another nonstudent full-time employee in the future. Staff described the working environment at The Pub as informal and fun, despite the fact that almost all positions paid minimum wage. Employees joked around and everyone was easy to get along with. At the same time, one bartender pointed out that employees “recognize there is a job to do and they get it done.” On busy nights, particularly weekends, it was a demanding working environment, often with late nights. Once clean-up was finished at around four in the morning, employees sat down for half an hour, had a drink, and relaxed. The board expected staff members to be role models to other students. Unruly behavior and excessive drinking were reprimanded by bans from The Pub, the elimination of discounts, or reduced hours, but almost never a notice to leave employment forever. Underperformance on the job, such as slow service as a bartender, was discussed by Scooter and Grove. The managers frequently worked as bartenders on busy nights. In general, less experienced staff members were scheduled to work on slower nights during the week.

DECISION MAKING AND GOVERNANCE
The Pub had a clear, but not necessarily strict hierarchy (see Exhibit 1). This hierarchy, although informal, was clearly understood by employees. One bartender noted, “roles are not entrenched or established within contracts or job descriptions.” Seniority and experience played a significant role and best described the structure of The Pub. Staff members who had been employed at The Pub for a number of years—usually two or more—were given added responsibilities such as key access so that they could open The Pub on nights they were working.

Exhibit 1

The Pub’s Structure

Board of
Directors
(15–17 people)
• Five Mount A students, elected and voting
• One university administrator, appointed by the
university and voting.

Manager

• Two Mount A alumni, elected and voting.

(Scooter)

• Two members at large from the university community, elected and voting. • Up to two alternative members at large, elected
and non-voting.
• One faculty member, elected and voting.

Student
Promotions Manager
(Chris Grove)

• One SAC representative, appointed by SAC.
• One accountant, appointed and non-voting.
• One manager, appointed and non-voting.
• One student manager, appointed and non-voting.

Bartenders

Coat
Check

Doorman
Ian Allen—long time employee
and Mount A staff member

Bus
Staff

The Pub: Survive, Thrive, or Die?
This document is authorized for use only in Strategy and the competitive environment by Dr Ioannis Thanos at HE OTHER from January 2013 to July 2013.

5

Scooter, a graduate of the commerce program at Mount Allison, was a well-recognized face on campus. Staff felt that he had a pleasant disposition and was easy going. Scooter also had strong ties to the community. He owned and operated a local restaurant, The Olive Branch, and did a lot of local contracting work with video and audio recording and productions. He worked as The Pub’s manager during the regular academic year (September to April) and travelled to Western Canada during the summer months working as a tree planter. A Mount A student-employee took on the responsibility of manager during the slow, summer months. The Pub’s sales during the summer break were minimal because the majority of students left town, so The Pub operated at reduced hours.

The Pub was a non-profit entity with an active board of directors. The board primarily fulfilled an advisory and governance role providing checks and balances, rather than getting involved with the operational side of the organization. Yet, the board was also a key resource to the university in monitoring The Pub and influencing its actions. For example, similar to most universities across Canada, Mount A made an effort to ensure responsible drinking on and around campus. The board was one way for the university to keep a check on the activities of The Pub and ensure safe and responsible drinking on campus.

In 1995, the board requested that Scooter compile a list of sanctions commonly imposed upon patrons who caused problems. Using Scooter’s list as the starting point, Scooter and a sub-committee of the board developed a set of disciplinary policies and procedures in line with the university judicial guidelines. In the event of unruly patrons, The Pub enforced appropriate sanctions as outlined in its Disciplinary Guidelines,6 including details on smuggling alcohol on premises, attempting to access a restricted area, breakage of bottles/glasses, violence/aggression, damage to property, drinking and driving, drinking after being cut off, fighting, harassment, indecency, loaning identification cards, refusal to comply with staff, theft, use/possession of illegal drugs, and underage drinking. An appeal process was also outlined, as well as guidance, albeit in less detail, on appropriate behavior for staff and board members. Strain described her role on the board as “someone who brings sober second thought. Anyone who has been the university representative is articulate enough to present the university’s position without having to veto decisions.” Board decisions were mostly unanimous, and it had made some tough decisions over the years. For the 2006–2007 academic year, the board decided to reduce Scooter’s salary and responsibilities at The Pub to cut expenses. His salary was reduced from $42,000 to $28,000. In 2006–2007 the board also decided to hire a student manager to fulfill some of Scooter’s responsibilities (e.g., promotions) at an estimated annual expense of $4,000. “Collectively we had no choice, we had cut back other costs and one big cost is Scooter’s salary. So when you are running deficits, savings are depleted. In an effort to turn it around, we all agreed to reduce the manager’s salary for one year,” explained Strain.

TARGET MARKETS
The Pub was open to all past and present members of the Mount A “community,” that is, faculty, alumni, current students, and anyone with a definable affiliation with the university. Patrons were required to provide government issued identification indicating that they were of legal drinking age (nineteen years old) before entering the facility. Scooter stated, “the core group of customers at the Pub would be the Pub members. Almost half

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of Mount A’s students purchase a VIP membership that gives them a number of benefits. Basically, those students who purchase Pub memberships are generally the most social students on campus, the ones who will come to the Pub at least a couple times per month throughout the year.” While all students at Mount A were technically members, only those who purchased a membership of The Pub for $40 were granted entry without having to pay a cover charge or discount on the cover charged at special events. The membership provided other privileges, such as drink tickets for a free glass of mixed hard liquor and frequent e-mail updates on events and drink specials at The Pub. Scooter and Grove promoted the annual memberships aggressively. Memberships were $40 ($30 for one term) and The Pub sold more than 700 memberships in the 2007–2008 academic year. The two years prior, the number of memberships sold was approximately 550 per year. However, Scooter noted that incentives offered in conjunction with these memberships (e.g., tickets for free drinks) had eliminated a substantial portion of the associated profits.

Scooter indicated that from time to time, faculty used the facility for a class event; however, this was infrequent. Scooter noted “in terms of revenue, the most valuable group of students are those who frequent The Pub because they are attracted to the dance floor. About 80 to 90 percent of the revenue earned by The Pub happens on Friday and Saturday nights, when we have dance parties. There are certainly other market niches—a small group of students prefers a sit-down Pub atmosphere, and will usually only visit The Pub on weeknights for quieter events such as trivia, games nights, and nights with no special theme or louder dance music. However, the majority of students prefer the dance club atmosphere of the weekend dance parties.” The Pub did not offer hot food—just snacks such as nuts, chips, and bars. Scooter also explained that providing food would not be option for The Pub in its current location. It did not have a kitchen and the cafeteria in the University Centre was located on another floor, and would be moved to the new University Centre.

The Pub offered a wet/dry event every Wednesday night and sometimes for special events such as when there was live music. For these events, individuals who were under the legal drinking age and those who chose to refrain from the consumption of liquor were restricted to a clearly marked and separated area within The Pub. On rare occasions The Pub hosted completely dry events. Scooter expressed that attempts to host wet/dry events in close co-operation with SAC had not always resulted in the expected turnout of students. Generally speaking, turnout of non-drinkers depended upon what else was offered, such as live music or other forms of entertainment. Scooter explained that profit margins on non-alcoholic beverages were low. The most attended event during the weekday evenings was Trivia Night on Tuesdays. It was a quiet night and teams that correctly answered the most trivia questions in a round of ten won drink tickets. On any given Tuesday, The Pub was likely to give away more than thirty drink tickets. Various events, such as live music, often in support of charitable causes, were sometimes hosted at The Pub and most of the cover charge for these events was passed on to the bands or charity. (Exhibit 2 provides a schedule of the usual events hosted at The Pub during a regular week).

The Pub’s open access Web site had become a popular outlet to keep members as well as the broader community up-to-date on past, present, and future events.7 Photos taken at The Pub were posted on a weekly basis. There was a section devoted to alumni that included an e-mail directory and photos of homecoming and convocation/reunion.

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Exhibit 2

The Tantramarch Club Weekly Schedule

Day

Mon.

Tues.

Wed.

Thurs.

Fri.

Sat.

Hours of operation Normal Bar
(Closed Sun)
Hours
(9 P.M.–1 A.M.)

Normal Bar Hours
(9 P.M.–1 A.M)

Normal Bar
Hours
(9 P.M.–1 A.M)

Normal Bar
Hours
(9 P.M.–1 A.M)

9 P.M.–2 A.M

9 P.M.–2 A.M

Special
programming

None

Trivia

Wet/Dry
Wednesdays

Club/Society
Event or Bingo

Dance/Music

Dance/Music

Cover charge

Usually none

Usually none

Usually none

Usually none

Yes

Yes

Description of
activities

No particular
program

• Three rounds of
trivia questions/
music in between
• Molson Canadian
draft drink tickets
as prizes
• Busiest night during the week
(excluding Friday
and Saturday)

• Live entertainment
• Part of
facility
separated
for nondrinking

• Bingo on television
screens

• Music, pool,
dance floor,
quiet areas

• Molson
Canadian
draft drink
tickets as
prices

• Second
busiest night
of the week

• Music, pool,
dance floor
• Usually the
busiest night
of the week

• Music

Note: Some university affiliated organizations, such as The Argosy (the student newspaper), occasionally obtained exclusive access to The Pub on a weeknight, for example, to hold their semi-annual staff party there. Usually The Pub sponsored any alcohol that was consumed and was allowed certain privileges in return. For example, The Argosy allowed The Pub to advertise for free in the paper, although The Pub rarely did this.

FINANCIAL CRISIS
During the last decade, The Pub had experienced several years of financial loss (see Exhibit 3). The Pub drew upon its savings accumulated in the 1990s to cover its losses and if those reserves expired, The Pub would likely close. The Pub had nearly exhausted financial reserves and, at times, it was close to bankruptcy. New Brunswick’s rising minimum wage had increased expenses for a number of years. For example, in 2004 the minimum wage rate in New Brunswick was $6.20, in 2005 $6.30, in 2006 $6.70, in 2007 $7.25 and in 2008 $7.75. Strain indicated that The Pub’s financial situation was particularly acute in 2003/2004 when insurance costs shifted sharply. Beginning January 1, 2004, changes by the university’s insurance provider, the Canadian University Reciprocal Insurance Exchange (CURIE), prohibited the university from providing liability coverage to The Pub. CURIE provided coverage for most universities across Canada. CURIE decided to remove coverage from all student groups on every campus. The Pub was not the only organization on campus affected by this. The student-led newspaper (The Argosy), the student-led radio station (CHMA), and the SAC all had to find and fund their own coverage. CURIE’s rationale was that each member university did not control the risk associated with these groups. Cases involving student groups were driving up costs of coverage. This resulted in The Pub having to purchase liability insurance externally, costing an average of $17,000 per year. In subsequent years Strain noted, “the insurance market became less risk averse in general and our broker was able to get better rates for the same insurance, which helped.” The Pub mounted television sets to screen advertisements along with pictures of patrons in an attempt to increase revenues. Scooter estimated that advertising revenue was less than $600 annually for each of the last three years. The Pub made minimal

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Case Research Journal • Volume 30 • Issue 1 • Winter 2010 This document is authorized for use only in Strategy and the competitive environment by Dr Ioannis Thanos at HE OTHER from January 2013 to July 2013.

This document is authorized for use only in Strategy and the competitive environment by Dr Ioannis Thanos at HE OTHER from January 2013 to July 2013.

1,528

85,674

Cleaning

6,228

Entertainment

1,578

Professional fees

0

-2,445

Net Earnings

0
-10,675

93,502

0

88,119

0

2,123

0

35,623

2,208

14,500

0

1,660

2,025

2,288

0

1,801

2,125

7,759

8,345

4,494

992

5,953

514

1,092

82,827

14,655

1,962

16,454

49,756

76,673

126,429

1993

0

1,700

Subtotal expenses

T-shirts

Travel

Security stickers

Security

2,166

35,764

Salaries, wages, benefits

13,800

Repairs & maintenance

Rent

0

2,767

Office

Promotional

3,415

0

2,313

Miscellaneous

License fee

Interest & bank charges

Insurance

254

7,045

Deprec. leasehold improv.

Glassware

3,614

Deprec.—fixed assets

0

4,930

Cash lost/theft

Court settlement

1,017

Advertising & promotion

Expenses

Subtotal revenues

9,520

745

Misc Revenues, Cover charge

13,331

Insurance Claim

62,078

Membership fees

Gross Profit

72,650

134,728

1992

1994

9,531

91,525

0

0

2,126

0

31,926

2,829

15,225

0

1,250

2,555

1,680

0

1,018

3,296

6,350

8,345

5,566

0

6,865

0

2,494

101,056

18,434

0

15,692

66,930

88,583

155,513

Financial Statements

Bar & Food—cost of sales

Bar & Food—revenues

Revenue

Year ending

Exhibit 3

10,244

103,258

0

0

2,268

1,474

40,828

6,936

16,000

0

1,250

2,824

1,896

0

1,791

1,401

5,615

6,701

5,533

0

6,798

0

1,943

113,502

13,679

0

15,337

84,486

109,277

193,763

1995

7,682

98,632

0

0

2,001

144

43,381

813

16,000

0

3,095

3,539

2,243

0

3,053

472

930

7,472

3,000

6,880

0

4,909

0

700

106,314

12,441

0

13,241

80,632

105,761

186,393

1996

14,242

123,232

0

1,667

1,000

687

55,361

7,904

16,800

0

2,821

3,044

354

250

3,853

500

679

7,633

3,000

8,055

0

8,556

0

1,068

137,474

24,947

0

15,661

96,866

118,068

214,934

1997

8,654

141,086

0

1,200

555

3,064

58,000

11,838

17,500

7,071

3,355

4,851

0

250

3,870

500

2,579

4,217

3,182

8,911

0

8,209

0

1,934

149,740

24,673

0

17,718

107,349

117,003

224,352

1998

23,063

160,237

904

1,481

0

4,155

81,008

7,317

17,500

8,426

3,141

4,405

0

250

3,888

500

1,351

3,917

0

11,844

0

7,999

0

2,151

183,300

21,335

0

19,328

142,637

131,275

273,912

1999

23,280

189,170

1,100

1,302

0

3,374

101,736

7,520

19,500

5,616

3,352

6,825

0

250

2,378

500

4,163

6,580

0

13,951

0

9,444

0

1,579

212,450

26,720

0

21,024

164,706

155,795

320,501

2000

28,298

199,389

240

1,413

0

4,984

108,131

5,804

20,000

9,802

3,418

4,513

0

250

1,400

500

3,881

8,306

0

15,559

0

10,714

0

474

227,687

32,096

0

21,485

174,106

175,070

349,176

2001

6,157

194,995

105

1,251

0

4,069

100,045

7,586

25,000

3,420

3,851

6,538

0

250

632

500

1,689

9,044

0

21,843

0

8,075

0

1,097

201,152

30,009

0

20,619

150,524

153,737

304,261

2002

-5,988

197,281

138

2,019

0

4,376

97,292

8,270

25,000

3,883

3,510

6,100

0

250

804

660

1,631

8,352

0

24,534

0

9,614

0

848

191,293

31,020

0

19,400

140,873

144,152

285,025

2003

978

187,475

15

2,548

0

3,993

89,679

7,453

22,000

5,029

3,010

7,298

0

250

619

6,275

1,041

5,848

0

23,816

0

8,601

0

0

188,453

23,025

0

20,796

144,632

129,146

273,778

2004

-28,835

191,144

0

2,035

0

2,827

80,497

3,839

22,900

206

5,629

8,062

680

250

657

17,166

3,528

7,426

0

18,727

0

8,380

8,335

0

162,309

15,592

0

16,184

130,533

109,602

240,135

2005

-24,596

161,226

0

1,756

0

1,975

73,315

6,099

22,900

841

4,530

7,765

119

300

874

13,134

348

4,460

0

15,880

0

6,930

0

0

136,630

18,189

0

20,199

98,242

86,472

184,714

2006

-14,665

120,156

0

963

0

996

56,734

2,559

18,900

475

4,690

6,148

0

250

835

9,014

1,109

2,726

0

8,264

0

6,493

0

0

105,491

14,846

0

17,557

73,088

88,007

161,095

14,056

151,844

0

1,302

0

1,344

85,115

1,867

21,900

3,663

4,645

6,214

0

300

659

7,210

718

1,936

0

6,094

0

8,877

0

0

165,900

21,357

0

31,484

113,059

119,367

232,426

2007 Expected 2008

Tantramarsh Club Inc. Balance Sheet Fiscal Year Ended April 30, 2007 2007

2006

$10,037

$30,729

Term Deposits

18,936

21,307

Inventory (Note 3)

23,524

8,304

Prepaid Expenses

5,215

6,541

Total current assets

$57,712

$66,881

EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Note 4)

$24,620

$28,265

Total Assets

$82,332

$95,146

Assets
CURRENT ASSETS:
Cash

Liabilities and Members’ Equity:
CURRENT LIABILITIES:
Accounts payable and accrued liabilities
Due to Mount Allison University
Total Liabilities

$1,526

$41

1,141

805

$2,667

$846

MEMBERS' EQUITY:
Retained Earnings

$79,665

$94,300

Total Liabilities and Members’ Equity

$82,332

$95,146

Tantramarsh Club Inc. Statement of Cash Flows
Fiscal Year Ended April 30, 2007
2007

2006

$193,498

$226,931

Operating Activities
Cash receipts from customers
Cash paid to suppliers & employees
Interest paid
Cash Flow Used By Operating Activities

(211,444)

(230,981)

(835)

(874)

$(18,781)

$(4,924)

$(4,618)

$(1,053)

Investing Activities
Additions to capital assets
Proceeds on disposal of capital assets
Term deposits
Cash flow used by investing activities

---

274

2,371

(361)

$(2,247)

$(1,140)

$-336

$(1,319)

$336

$(1,319)

Financing Activity
Advances from (to) related parties
Cash flow from (used by) financing activity
Decrease in Cash Flow

$(20,692)

Cash—Beginning of year

30,729

38,112

$10,037

$30,729

Cash—End of Year

10

$(7,383)

Case Research Journal • Volume 30 • Issue 1 • Winter 2010 This document is authorized for use only in Strategy and the competitive environment by Dr Ioannis Thanos at HE OTHER from January 2013 to July 2013.

attempts to make the facilities available to conference guests over the summer months. The idea was promising, as higher prices could be charged to these guests and tips were usually much higher than with students. Approximately 3,000 conference attendees over nineteen years of age stayed on campus during the spring and summer months. Unfortunately, as Scooter noted, The Pub was old, tired, and had a student-oriented physical appearance, which discouraged conference attendees from visiting. Some summer guests had openly commented that the colorful drawings, worn-down plastic chairs, 1950s style repainted tables, openly displayed heating pipes and air vents on the ceiling, noticeable stench, and countless stains on the carpet were powerful reasons for not entering the locale. Strain echoed Scooter’s comments and she too felt that the run-down appearance of The Pub affected sales from conference attendees. She also noted “the manager goes away in the summer and The Pub hires a student manager. Sometimes the summer manager has another job and can decide when and how often The Pub is open. So it is problematic. To ensure service for conference guests, it is sometimes better to recommend that they go to Ducky’s, in town.” Scooter and Strain anticipated that faculty and conference attendees would be more inclined to visit The Pub in its new location. Both felt that The Pub needed to find a way to capitalize on this opportunity.

COMPETING FOR A SMALL MARKET
Scooter indicated “2007–2008 shows signs of being one of our most profitable years in some time, partly because of the closure of one of the competing bars in town.” Three competing bars catered primarily to students (see Exhibit 4). There had been a fourth competitor but it had recently closed. All bars were located within a one kilometer radius of each other. Scooter was friendly with the management of these other pubs. Often, one of The Pub board’s members was a manager from one of the competing pubs in town. There were also several other small bars located in Sackville that primarily attracted locals, but not students. Scooter estimated that each direct competitor took away approximately 10 percent of The Pub’s potential sales revenue and affected its contribution margin by $15,000. “We were faced with a strong competitive challenge from one specific establishment located off-campus. That establishment recently closed, due in part to regulatory noncompliance issues relating to the fact that a large number of underage university students were able to get into that bar on a regular basis. As soon as that establishment closed down, business volumes and profitability returned to The Pub.” The Pub’s primary focus was to offer a service to Mount A constituents and as a nonprofit organization, it offered the lowest prices on alcoholic beverages in town. Recent provincial legislation permitted bars to advertise prices. However, The Pub’s close affiliation with Mount A and its related university policies and regulations prevented this. The Mount A Liquor Policy indicated that advertising on campus, outside The Pub, and for events at The Pub, had to comply with University policies.8 Prices of alcohol (including reduced prices) were not to be quoted and promotion of overconsumption was not permitted.

The local liquor store (Alcool New Brunswick Liquor (ANBL)) was approximately 1 kilometer from The Pub. The town of Amherst, Nova Scotia, was about 20 kilometers from Sackville and the city of Moncton, New Brunswick, about 50 kilometers. Scooter did not consider bars in Amherst and Moncton a threat; however, students were known to travel to these areas from time to time for a night out. A University Club on

The Pub: Survive, Thrive, or Die?
This document is authorized for use only in Strategy and the competitive environment by Dr Ioannis Thanos at HE OTHER from January 2013 to July 2013.

11

Exhibit 4

Competitor Details and Map of Sackville

Uncle Larry’s. Located approximately a kilometer from The Pub in downtown Sackville. The facility could hold approximately 300 people and was a popular hangout for locals of Sackville throughout the week, as well as a popular hangout for students when special events were held there. It was formerly a Dooley’s franchise and as a result, numerous pool tables were located throughout the facility. There was also a dance floor comparable to or slightly bigger than the dance floor space at The Pub. The facility itself was much larger than The Pub and could therefore accommodate a larger group. Generally, Friday and Saturday nights were the busiest nights at Uncle Larry’s. Students frequent Uncle Larry’s usually for special events such as Keith’s Crew and Mount A fundraisers. Keith’s Crew was an event held once or twice a semester sponsored by Alexander Keith’s Brewery. Entry was $12 for all you could drink of Keith’s beer and there was usually a live band. It was usually held on a weeknight (Thursday) and the bar was often filled to its capacity. Uncle Larry’s also hosted events for fundraisers such as Shinerama. Operating hours were 10 A.M. until 12 A.M. Sunday to Thursday (unless there was a special event) and Friday and Saturday until 2 A.M. Prices were comparable to The Pub and there were always drink specials that were comparable with The Pub. There was a large selection of available drinks and this was comparable to other places in town.

Ducky’s. A venue considerably smaller than Uncle Larry’s, The Pub or George’s Roadhouse. It was located near Uncle Larry’s in the downtown of Sackville, less than a kilometer from The Pub. Ducky’s typical consumer was someone interested in non-mainstream music (e.g., indie music was popular there). The crowd of Ducky’s was very low key; students who wanted to go out for a drink would go to Ducky’s rather than go to The Pub where people usually had more than a drink. It was a laid back atmosphere. Students, locals and faculty of the university were known to frequent Ducky’s. The manager of Ducky’s was a former Mount A graduate who was also a member of The Pub board of directors. There was no dance floor but there was a large screen television. There were some couches located near the television. It was open seven days a week from 3 P.M. to 2 A.M. The busiest nights were Friday and Saturdays, although Tequila Tuesdays (reduced prices on Tequila) were popular as well. George’s Roadhouse. Located the furthest from downtown Sackville, at approximately 1.5 kilometers from The Pub. It was not a regular hangout for students who preferred mainstream music, although the inexpensive Sunday brunch was known to draw a Mount A following. Mount A students who had an interest in Indie music were likely to frequent George’s for live acts by student bands or visiting bands. George’s had a stage to support live music acts and hosted visiting acts organized by The Tantramarsh Blues Society every couple of months. The Tantramarsh Blues Society was a non-profit organization that coordinated live blues’ music acts. The contact person for the society was a faculty member of Mount A17. The Roadhouse provided an avenue for non-mainstream music. The music would be different than what would be heard at The Pub or Uncle Larry’s.

Source. http://www.mta.ca/conference/images/map_sackville.gif

12

Case Research Journal • Volume 30 • Issue 1 • Winter 2010 This document is authorized for use only in Strategy and the competitive environment by Dr Ioannis Thanos at HE OTHER from January 2013 to July 2013.

campus targeted faculty and staff. It offered bar services for special events usually held on Fridays. The University Club was open for lunch throughout the week, but did not offer bar services during that time.

LESS ALCOHOL MORE FOOD
Revenues for the Canadian Food Services and Drinking Places industry were $40.6 billion in 2006, up 4.5 percent from 2005.9 Three of the four sectors of the industry experienced growth. The Limited Service sector (restaurants where meals were ordered and paid at the counter) experienced growth of 6.6 percent, the Special Food Services sector (contractors, social caterers, and mobile food services) experienced growth of 6.2 percent and Full Service Restaurants (consumers ordered and paid for meals at a table) experienced a growth of 4 percent. The fourth sector, Drinking Places, was the only sector to experience a decline in operating revenues. In 2006 the decline was 6.2 percent, and that was the second consecutive year of decline for that sector. In 2006, sales of food and nonalcoholic beverages accounted for 83 percent of total sales in the industry, while sales of alcoholic beverages accounted for 14 percent.

Campus pubs had been hit hard by the decline in their alcoholic beverages’ sales. Campus pubs were no longer lucrative cash cows. In Canada, most campus pubs had experienced declining revenues as students became more studious, health conscious, and money minded.10 Students preferred to spend time socializing at campus coffee shops rather than at campus pubs. For example, in 2006 Dalhousie University’s campus pub, the Grawood Lounge, located in Halifax, Nova Scotia, had experienced a $40,000 loss, and one of the campus pubs at University of Alberta, the Power Plant, was closed and replaced by a coffee shop.

To survive, campus pubs moved from a model that focused on alcohol sales to one that was more multi-purpose with food offerings and a diversified range of programming to attract and retain consumers.11 For example, the University of Windsor’s campus pub, the Basement, experienced a decline in alcohol sales in 2007, but food sales were up and overall revenues increased. Renovations to the facilities, new catering options, and changes to the entertainment resulted in the higher sales. Student unions were quick to argue that the intent of campus pubs was not to attain profits but rather, break-even and provide a safe and convenient locale for students. For example, Oliver’s, Carleton University’s campus pub, subsidized the cost of food to keep prices as low as possible for students.

UNIVERSITIES TAKING ON RESPONSIBLE DRINKING
There were efforts at universities across the country to tackle social norms and alcohol consumption. BACCHUS Canada, a part of The Student Life Education Company, was a non-profit organization committed to the promotion of healthy decisions on the use and non-use of alcohol and other health issues by post-secondary education students.12 Through its membership base, BACCHUS strived to disseminate information to students and worked to facilitate change on campuses across the country. Research indicated that students’ estimates of alcohol consumption by peers were much higher than real consumption.13 In 2004, BACCHUS conducted research with 14,000 university students at ten universities in Canada. Sixty-three percent drank twice or less per month, but 80 percent believed that their peers drank once or more per week. Other campus

The Pub: Survive, Thrive, or Die?
This document is authorized for use only in Strategy and the competitive environment by Dr Ioannis Thanos at HE OTHER from January 2013 to July 2013.

13

groups across the country, similar to BACCHUS, strived to eliminate misconceptions about alcohol consumption among students.
Mount A implemented several mechanisms through which non-drinking and moderate drinking were encouraged. The Health Matters Society organized health promotion activities annually to promote non-drinking and responsible drinking.14 An alcohol use/awareness week often occurred at the same time as homecoming weekend. The Pub was sometimes involved in these initiatives. In 2006, a partnership between SAC and the Student Life Department at the university set out to celebrate Mount A students who did not drink, drank moderately, or changed their alcohol behaviors temporarily.15 The “Our Best Times Are Not Wasted” initiative offered mini grants to individuals or groups who organized non-alcoholic events and the group offered tips for moderate drinking. More than 400 people attended one event held at The Pub in September 2006.16

OPPORTUNITY FOR A NEW BUSINESS MODEL
Mount A began renovations in 2007 on one of the older buildings on campus to create a new University Centre housing almost all administrative and non-academic studentrelated operations of the university. The Pub’s move to its new location within the new centre was scheduled to take place in August 2008. Many details were still unclear and The Pub still needed to make decisions about the type of bar that it was to become. Strain expressed, “the board was giving input all along the way. It was back and forth. Right now it is a dance bar opened essentially for two hours on two nights of the week. We discussed where we will place a DJ booth, does it have to be like the DJ booth in the current location or is it going to be one we can push into a closet, pull out and set up to allow more flexibility. Even though we are moving in a few months, the board has not really made many decisions that need to be made. For example, about the pool tables, the number of seats, the types of tables. The university will have to make those decisions if the board and Scooter do not.” Scooter had been heavily involved in the planning of the new location. He designed the bar to serve up to 300 guests; however, the new pub’s capacity would be 150. In The Pub’s new location up to four bartenders would be able to serve customers and two cash registers would be available. Strain indicated that the new pub could also rent a space adjacent to it which would increase its capacity to 200. “The university designed a space that was as flexible as possible, so that The Pub can be anything it wants to be” said Strain.

The new location was expected to provide many improvements. It would be more professional in terms of physical appearance, thus allowing for corporate and conference guests to bring business to The Pub over the slow summer months. It would have a debit card payment option for patrons and an ATM would be located outside The Pub but within the University Centre building. New appliances, such as a more environmentally friendly dishwasher, better draft pouring appliances, new chairs, tables, counters, and a generally more convenient bar set-up, would provide for more efficient service and increased profitability. Scooter noted, “some of the most likely opportunities for the new location will relate specifically to the facility and to the nearby location of the university café. From an operational point of view, the current location is in pretty rough shape as far as the infrastructure goes, so it will be nice to move into a new location with functional plumbing and electrical, which doesn’t require repairs every week or so. From the customers’ point of view, we should be able to partner with the new café in terms of hav-

14

Case Research Journal • Volume 30 • Issue 1 • Winter 2010 This document is authorized for use only in Strategy and the competitive environment by Dr Ioannis Thanos at HE OTHER from January 2013 to July 2013.

ing pub food available, which could enhance our weekday traffic and increase sales and profitability during times when the dance floor is not operational.” The university would cover incidental costs such as moving fees and infrastructure needs. The university would provide The Pub with a loan to buy the new equipment and furniture that the university required it to purchase. This loan would be repaid over a number of years. University officials had recently indicated that the loan would be more than the $100,000 first expected. The Pub was to make a $40,000 down payment on the loan and set up a payback plan at a 2 percent interest rate. Members of the board and Scooter had contemplated the future of The Pub. The new location would be an ideal opportunity to alter the business model that had been in place for some time. The board had to evaluate The Pub’s ability to compete with other bars targeting the student market in Sackville, as well as The Pub’s ability to attract a broader scope of consumers, students and otherwise. It was clear that Scooter needed to develop an explicit plan before the board met again.

NOTES
1. Mount Allison University’s Web site www.mta.ca.
2. 2008. “Trends in higher education. Backgrounder. Snapshot of Canadian universities.” Association of Universities and Colleges of Canada. Web site accessed March 19, 2009. http://www.aucc.ca/publications/media/2002/trendsback_e.html . 3. 2008. “The gap in achievement between boys and girls.” Statistics Canada. Web site accessed March 19, 2009, http://www.statcan.gc.ca/pub/81-004-x/200410/7423eng.htm. 2004. “University enrolment.” The Daily. Statistics Canada. Web site accessed March 19, 2009, http://www.statcan.gc.ca/daily-quotidien/040730/dq040730beng.htm. 4. The Maclean’s magazine annual rankings assesses Canadian universities on a diverse range of factors, from spending on student services and scholarships and bursaries, to funding for libraries and faculty success in obtaining national research grants. Maclean’s surveys universities with a focus on the undergraduate experience. The intent is to offer an overview of the quality of instruction and services available to students at public universities across the country.

Source. Dwyer, M. 2008. “Our 18th Annual Rankings.” Maclean’s, 19 December, Web site accessed August 31, 2009, http://oncampus.macleans.ca/education/2008/12/19/our-18th-annual-rankings/. 5. The Constitution of the Tantramarsh Club http://www.mta.ca/pub/constitution.html. 6. The Tantramarsh Disciplinary Policies and Procedures http://www.mta.ca/pub/discipline.html. 7. The Tantramarsh Club Web site http://www.mta.ca/pub.

8. Mount Allison University Liquor Policy
http://www.tantramarshclub.com/archives/liquorpolicy2008.pdf. 9. 2008. Food Services and Drinking Places 2006 62-243-X, Service Industries Division. Statistics Canada. Web site accessed March 2, 2009, http://www.statcan.gc.ca/pub/63-243-x/2008001/5206040-eng.htm.

The Pub: Survive, Thrive, or Die?
This document is authorized for use only in Strategy and the competitive environment by Dr Ioannis Thanos at HE OTHER from January 2013 to July 2013.

15

10.CanWest News Service. 2007. Campus pubs going dry. November 10. Web site accessed August 21, 2009, http://www.canada.com/topics/news/national/story.html?id=0be6aac4-24e1-445a-bfa2-c0e75bed9da2&k=90085. 11.Fex, S. 2008. Campus pubs: The end is not nigh. University Affairs, January 7. Web site accessed August 31, 2009, http://www.universityaffairs.ca/campus-pubs-theend-is-not-nigh.aspx. 12.BACCHUS Canada Web site www.studentlifeeducation.com.

13.Gordon, A. 2007. Campus pubs hits dry spell. TheStar.com, October 27. Web site accessed August 31, 2009, http://www.thestar.com/living/article/269627. 14.Mount Allison University’s Health Matters Society Web site http://www.mta.ca/health/hms/index.html.

15.Mount Allison University’s Our Best Times Are Not Wasted Web site http://www.mta.ca/departments/sss/timenotwasted/index.html.
16.Trotter, Kris. 2006. “Best Times” at Mount A. Campus Notebook. Mount Allison University’s Communication Newsletter 27(2), Sackville: 8. Web site accessed February 20, 2009, http://www.mta.ca/extrelations/notebooks/05-06/oct_06.pdf. 17.The Tantramarsh Blues Society Web site http://www.mta.ca/tbs.

16

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