Case study – D.A. Garden

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Case study – D.A. Garden
David and his wife, Alison, have been in the garden supply and nursery business for the last 13 years. David supervises the nursery and garden supply part of the business, while Alison does the administration and bookkeeping and oversees the landscaping projects. Their employees comprise two full-time gardeners, a part-time landscaping consultant and two part-time cashiers. The trading hours are as follows:
Mon – Wed 9 am – 6 pm
Thurs – Fri 9 am – 6 pm (9 am – 9 pm in summer)
Saturday 8 am – 6 pm
Sunday 10 am – 6 pm
The business is located in a main road, opposite a small suburban shopping centre that includes a supermarket, department store, café and 12 specialty shops. About 2 kilometres down the road is a large Bunning’s store.
The business has prospered over the years through a steady stream of customers who are happy with the quality and cost of the goods and services, and the professional advice. David has a good rapport with most of them, and takes a keen interest in making sure their gardens are properly maintained.
Five years ago David and Alison opened a small café inside the nursery. They now have two full-time staff and an additional part-time staff member who works over lunch-time and on weekends; although during the school holidays Alison’s daughter also assists in the café. A new café opened for business 18 months ago around the corner, in a small strip of shops attached to a business park. This new operation is open Monday – Friday from 7am–3pm offering breakfast and lunch, specialising in gourmet food and beverages.
About three years ago, David and Alison decided to extend the café operations to include a larger lunch menu, more tables and extended the trading hours of the café so that it now opens at the same time, and closes one hour before, the nursery. The café offers takeaway food as well as sit-in dining and the menu includes a variety of beverages, made-to-order sandwiches, salads, gourmet pies/sausages rolls, quiches and savoury slices, chips/wedges, cakes and slices, ice creams and sorbets, a kids menu and soups and casseroles in winter.
The whole concept was a good one however their total business net profit has dropped steadily over the last two years, although gross revenue remains acceptable. They are at a loss to identify what has gone wrong and decide to seek help to redress the situation.
David and Alison seek advice from you. They brief you on the problem and you suggest they do marketing research as a first step on the road to establishing what the problem is.
You have been supplied with basic sales performance data for the last three years that shows the following:
Nursery sales have dropped by 5% in the last two years. These sales of these products currently contribute 41% to overall profits.
Garden Supplies sales have also dropped by 5%, although the last year saw an increase in drought proofing related products such as mulch. These products currently contribute 34% to overall profits.
Landscaping project numbers have been flat; however, the size and profit on each project has grown slightly. This has meant a steady contribution to overall profits of 10%.
Café trade has been steadily increasing for the last three years and as result profits from this have been growing at a rate of 2–3% per annum, currently contributing 15% to the overall profit of the business.

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