{"id":5043,"date":"2015-12-09T17:24:19","date_gmt":"2015-12-09T22:24:19","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/winner-winner-chicken-dinner\/"},"modified":"2015-12-15T14:15:41","modified_gmt":"2015-12-15T19:15:41","slug":"winner-winner-chicken-dinner","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/winner-winner-chicken-dinner\/","title":{"rendered":"Winner Winner, Chicken Dinner"},"content":{"rendered":"

Business Model<\/strong><\/p>\n

Overview
\n<\/em><\/p>\n

Born out of frustration with the lack of healthy food alternatives (and\u00a0exact nutritional information), Snap \"PhotoKitchen was started in 2010 by friends, Martin Berson and Brad Radoff.\u00a0 They sought to provide customers with a health food concept that was both a convenient and transparent take-away option for breakfast, lunch and dinner.\u00a0 Opening two stores in Austin and a flagship store in Houston, they tested the idea in two very different Texas markets.\u00a0 And it didn\u2019t take long to prove the idea.<\/p>\n

\"PhotoAfter early success, Snap attracted the attention of private equity investor, Catterton Parters, who helped fund the company\u2019s early stage growth phase.\u00a0 Less than two years later, Catterton provided a second round of funding as well as a seasoned CEO, David Kirchhoff, who is the former CEO of Weight Watchers.\u00a0 After speaking with him in connection to this assignment, David described this opportunity as unlike any concept he had seen before.\u00a0 He was most impressed by Snap\u2019s ability to marry \u201ccrave-able food\u201d that is \u201cridiculously good for you\u201d at \u201cmaximum convenience,\u201d a combination he had not yet seen executed well.<\/p>\n

The business has expanded from its Austin headquarters to four cities: Houston (12 locations), Austin (7 locations), Dallas (10 locations, 1 additional opening planned) and Chicago (7 locations).\u00a0 Philadelphia is slotted to be its next expansion target.<\/p>\n

Value Proposition<\/em><\/p>\n

As an innovative food retailer, Snap promises to offer its customers \u201cconsciously crafted food\u201d and \u201cchef-driven creations prepared with the highest quality ingredients.\u201d \u00a0Variety, quality ingredients, and convenience are combined to offer customers a superior product offering in each store.\u00a0 Not surprisingly, Snap charges a premium for its \u201ccreations.\u201d\u00a0 For example, a 16 ounce juice is priced at $7.99, and typical dinner entr\u00e9es cost between $8.00 – $15.00 per item.\u00a0 The hefty price tag is, in part, a result of premium ingredients costs that are passed along to the consumer.\u00a0 Snap is designed to be a one-stop-shop for even the pickiest of foodies.<\/p>\n

\"Photo<\/p>\n

Operating Model<\/strong><\/p>\n

Kirchhoff articulated that he sees Snap as three distinct companies disguised as one.\u00a0 Its business model depends on effective implementation of all three.<\/p>\n

Company #1:\u00a0 Small-Batch Kitchen <\/em><\/p>\n

Snap uses a \u201ccommissary kitchen\u201d model where larger kitchens are built and meant to supply finished product to the surrounding storefronts within each of its target demographic.\u00a0 Small batches of menu items are prepaid in these kitchens, packaged and finally transported in refrigerated trucks to the surrounding storefronts.\u00a0 These commissary kitchens act as distribution centers and allow Snap to consolidate its operations.\u00a0 For example, ingredients and materials are delivered to a minimum number of locations, and food preparation and packaging activities are streamlined.<\/p>\n

\"PhotoWhile traditional restaurant kitchens strongly emphasize culinary skill, their operations tend to be hectic and messy behind-the-scenes.\u00a0 On the other end of the spectrum, assembly line or {very} traditional commissary kitchens tend to operate more efficiently but lack in quality and taste.\u00a0 To realize the benefits of both, Snap utilizes a small batch production process to maintain consistency and quality, key company value propositions, while still maintaining\u00a0a culinary edge.<\/p>\n

In addition to creating consistent, high quality products, Snap also offers customers variety.\u00a0 Because Snap offers such a wide range of SKU\u2019s, its small-batch kitchen process is ideal.\u00a0 In fact, because its menu is so broad, mass production wouldn\u2019t be possible.\u00a0 The menu items are designed to address a nearly exhaustive list of dietary needs and restrictions, including clear ingredients labeling.\u00a0 Customers can will find products that address various dietary needs and preferences; example labeling includes \u201cNon-Dairy,\u201d \u201cCarb Conscious,\u201d and \u201cPaleo.\u201d\u00a0 For each menu item, the calorie count, ingredients list, and preparation instructions (if applicable) are clearly visible.<\/p>\n

Company #2:\u00a0 Specialty Retailer <\/em><\/p>\n

When customers walk through a given store\u2019s door, they will find an intentionally designed layout that is optimized for quick choices.\u00a0 The vast and broad take-away menu items are sorted in an open floor plan according to breakfast, lunch, dinner and snack categories.\u00a0 Storefronts vary in their product and service offerings: some offer customers prepared and packaged menu items only while others offer customized solutions such as a salad bar.\"Photo<\/p>\n

These storefronts receive daily deliveries and are typically much smaller than food preparation centers.\u00a0 Because these stores require less capital investment and real estate, Snap can open more of them.\u00a0 Applying this concept to their target markets helps Snap execute on one of its core values: convenience.\u00a0 By building more of these smaller stores, Snap increases its footprint and makes itself a more accessible option to customers.\"Photo<\/p>\n

Complementing its chosen store design, distribution strategy and food packaging, Snap\u2019s ingredients sourcing reinforces its commitment to transparency, health, and most of all, quality.\u00a0 As a specialty food retailer, Snap sources as much of its ingredients from local sources as possible.\u00a0 The result is a rotating menu that changes according to the season and availability of those fresh ingredients. Examples of the local establishments from which Snap sources its ingredients in Austin, Houston and Dallas include:<\/p>\n

Live Basil \u2013 Bluebonnet Hydroponic Farms, Schertz, TX<\/p>\n

\u200bHoney \u2013 Good Flow Honey, Austin, TX<\/p>\n

Zucchini, Jalapenos & Eggplant \u2013 Pedernales Valley Farms, Fredericksburg, TX<\/p>\n

Pastured, Certified Humane Eggs \u2013 Vital Farms, Austin, TX<\/p>\n

100% Grass-Fed Ground Beef \u2013 Burgundy Pasture Beef, Grandview, TX<\/p>\n

Watermelon \u2013 Haily\u2019s Best, Edinburg, TX<\/p>\n

Further evidence of Snap\u2019s local sourcing can be found in its recent SPE 3-star certification (SPE\u2019s highest rating), which evaluates foodservice operations on the basis of sourcing, sustainability, nutrition, menu balance, training and transparency.<\/p>\n

Company #3:\u00a0 E-Commerce<\/em><\/p>\n

Although only four months into the job, Snap\u2019s new CEO, Kirchhoff, is focused on the company\u2019s next step: its website.\u00a0 Currently, SnapKitchen.com functions as a blog and information source for Snap products.\u00a0 Kirchhoff and his team see Snap\u2019s e-commerce presence as crucial to its growth and also to its mission of maximum convenience.\u00a0 While Snap has succeeded in establishing convenient and accessible locations in their current markets, customers are demanding more.\u00a0 A digital option for order placement and delivery is a logical expansion of Snap\u2019s commitment to convenience.\u00a0 Snap has already hired a chief technology officer to lead the charge and is currently in the midst of building a product development team to support this operational expansion.<\/p>\n

What\u2019s Next?<\/strong><\/p>\n

Snap entered the market as the health conscious trend was ramping and has now established itself as an effective, scalable business.\u00a0 As Snap grows, it must continue to focus on achieving greater food preparation efficiencies and streamlining its supply chain.\u00a0 With a seasoned CEO at the front and an experienced private equity sponsor in the backdrop, Snap has all of the ingredients to continue down its path of success.<\/p>\n

 <\/p>\n

SOURCES<\/strong><\/span>:<\/p>\n

Internet Research<\/p>\n