UVA-OM-1479 Rev. Mar. 26, 2013 Páginas de uso exclusivo promocional. Puede adquirir la versión completa en www.iesep.com NOBULL BURGER As NoBull founder Crissanne Raymond examined the company’s kitchen, she knew that she and her daughters could use some help with operations. NoBull, a new, Charlottesville-based vegetarian burger producer, was at a critical junction in its development. While the business had grown substantially over the past year, it faced a number of challenges as it continued to expand it sales outside the Charlottesville region. In particular, as the burgers increased in popularity, the owners were unsure as to whether current production could keep pace with demand. The Raymonds knew that, in order to reach NoBull’s eventual goal to expand nationwide, they had to better understand both NoBull’s current capacity as well as its future operational requirements. Background NoBull Burger1 (NoBull) was started by Charlottesville native Crissanne Raymond. Crissanne had run her own successful catering business for years when, in 2011, she saw an opportunity to start a new venture based on her vegetarian burger recipe, one that had been inspired by the memory of her mother’s lentil soup. To launch NoBull, Crissanne had enlisted the help of two of her daughters, Heather and Elizabeth, both of whom left their own budding careers to help with the business. As Elizabeth said, “[we] kept thinking, ‘what if we don’t do this?’ We might miss out on a big adventure.” NoBull’s target customers were a mix of vegetarians,2 health-conscious consumers, and people who were just looking for a tasty burger not made of meat. Broadly speaking, NoBull competed in the meat substitute category, which included such foods as tofu and tempeh as well 1 NoBull Burger was incorporated under the name “Oh My Gosh…Yum!” after the most common reaction to eating the burger. 2 Estimates for the U.S. vegetarian population varied from 2% to 8%. This case was prepared by Merritt Osborn (MBA ’13) and Elizabeth Tang (MBA ’13) under the supervision of Tim Kraft, Assistant Professor of Business Administration. The case is based on field research of an actual business situation. Some names, dates, and financial data are disguised, and some material is fictionalized for pedagogical reasons. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright 2012 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved. To order copies, send an e-mail to sales@dardenbusinesspublishing.com. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School Foundation. ◊ Distribuido por IESE Publishing. Si necesita más copias, contáctenos: www.iesep.com. Todos los derechos reservados. -2- UVA-OM-1479 Páginas de uso exclusivo promocional. Puede adquirir la versión completa en www.iesep.com as vegetarian burgers. In 2011, U.S. meat substitute sales grew to $277 million, an increase of 10% since 2008.3 Within the vegetarian burger market, three companies—Gardenburger, Morningstar Farms, and Boca Burger—dominated with an 88% market share. The remaining 12% of vegetarian burger sales came from many smaller companies.4 NoBull burgers were low-fat, whole-grain burgers, and as Crissanne said, “[it’s] dinner in under 10 minutes.” From the customers’ perspective, one of the major advantages of NoBull burgers compared to other vegetarian burgers was the homemade process used to create them. This hallmark style could be seen in the physical appearance of the burgers. Whereas competitors’ burgers often looked processed with no distinguishable ingredients, customers could actually see the lentil beans, spinach, and other ingredients that went into NoBull burgers (Exhibit 1). To showcase this quality, NoBull burgers were packaged in clear plastic containers. Initially, Crissanne and her daughters had sold the burgers through the Charlottesville City Market and a few local health food stores and restaurants. But as NoBull saturated the Charlottesville market, the Raymonds began to expand their reach to nearby cities. By performing demonstrations and offering free samples in stores and supermarkets, they were able to win over customers in new locales. Within months, word spread, and NoBull’s customer list grew rapidly; stores in Richmond, Virginia, and Washington, DC, were requesting its product. While sales to retailers, restaurants, and wholesalers grew, NoBull still continued to sell directly to customers, with particularly strong sales still coming from the Charlottesville City Market. NoBull even received calls from customers across the country asking to buy the burgers. NoBull always satisfied these customers by shipping burgers in special frozen packaging. Since 2011, NoBull had experienced tremendous growth, with sales increasing 65% per quarter (Exhibit 2). The company began to get calls from investors interested in financing the growing company. Given the high demand and positive customer feedback, the Raymonds believed there was an opportunity to take NoBull Burger nationwide. Yet with so much capital already tied up in the business and minimal cash on hand, they were nervous about taking another step without first understanding the limits of their current operations. Current Operations NoBull’s current production process consisted of four basic steps: (1) cooking the lentils; (2) cooking additional ingredients; (3) creating the burger mix and cooking the burgers; and (4) packaging and labeling the burgers. In its kitchen, NoBull had one stove and one grill. The stovetop was used to cook the lentils (step 1); the stove oven was used to broil the additional ingredients (step 2). The grill was used to cook the burgers (step 3). Currently, NoBull made Anne Marie Chaker, “The Veggie Burger’s New Dream: Be More Like Meat,” Wall Street Journal, January 25, 2012. 4 Data for 52 weeks ended November 4, 2007, for Frozen Meat Substitutes, from Information Resources Inc. 3 Distribuido por IESE Publishing. Si necesita más copias, contáctenos: www.iesep.com. Todos los derechos reservados. -3- UVA-OM-1479 Páginas de uso exclusivo promocional. Puede adquirir la versión completa en www.iesep.com only two varieties of burgers: original and mushroom. To analyze the production process, the Raymonds chose to focus on the mushroom burger. Each batch consisted of approximately 80 burgers. The batch size had been determined roughly based on grill space and pot sizes as well as concerns about the impact a greater number of burgers per batch could have on quality. The first step in the process was to cook the lentils, which formed the base for the burger mix. One pot of lentils was used per batch of 80 burgers; a pot took approximately 45 minutes to cook. With the current stovetop, up to four pots of lentils could be cooked simultaneously. Cooking the lentils required a cook’s time for roughly half of the 45-minute cook time. During the remaining time, the cook was free to perform other cooking steps. Next, the additional ingredients that would be added to the cooked lentils were prepared. For the mushroom burger, both mushrooms and onions needed to be cut and cooked. One whole pan of mushrooms and one whole pan of onions were required for each batch of 80 mushroom burgers. A pan of mushrooms took about 10 minutes to cut and prepare for cooking. A pan of onions also took about 10 minutes to cut and prepare. For the cooking phase of this step, a cook placed both the pan of mushrooms and the pan of onions into the oven to broil at the same time. Mushrooms required 6 minutes of cooking, and onions required 8 minutes.5 Therefore, the total time required to prepare the onions and mushrooms was the total setup time for both ingredients plus the longest cook time of either the mushrooms or the onions. There was only enough space in the oven for one pan of mushrooms and one pan of onions to be cooked simultaneously. After the mushrooms and onions were cooked, they were added to the cooked lentils along with spinach, carrots, and some proprietary spices to complete the mushroom burger mixture. The ingredients were mixed together for approximately 5 minutes. Then, each burger was molded by hand into a patty and placed on the grill (which was separate from the stovetop that was used to cook the lentils, mushrooms, and onions). The grilling process took about 25 minutes per batch and required a cook’s full attention. Grilling time included the time required to mold each burger and place it on the grill. After cooking, the burgers were removed and stacked on a sheet pan, ready to be packaged. Burgers were grouped into sets of four in preparation for packaging. Each group of four burgers was wrapped in plastic and sealed using a vacuum sealer. A label was then applied by hand to the package, and the final product—ready to be sold—was placed in a freezer.6 The vacuum sealer took 10 minutes per batch of 80 burgers to operate and required about 5 minutes of preparation time to set up before each batch. The labeling process was completely manual and took about 7 minutes per batch. Details for all the steps in the process are provided in Exhibit 3. Note that at the end of each day, any burgers or ingredients (e.g., a batch of burger mix) that were not completed (i.e., packaged and labeled) were refrigerated overnight for use the next day. 5 Due to the short cooking times, a cook typically did not multitask process steps while the ingredients broiled. NoBull’s freezer was large enough to store well over 50 batches and was more than adequate for its current capacity needs. 6 Distribuido por IESE Publishing. Si necesita más copias, contáctenos: www.iesep.com. Todos los derechos reservados.