NoBull Burger (NoBull) is a new Charlottesville based vegetarian burger producer. The business was facing number of problems such as marketing, distribution and cash flows issues. The major issue was its sales were rising at a rapid space, and NoBull was not sure if the current production level will be able to cater the demand. NoBull needed to improve its operations to identify potential improvement to the current operation. Therefore, some analysis needs to be done in order to help NoBull’s goal to expand nationwide.
NoBull target customers were a mix of vegetarians, health conscious consumers and people who were looking for a tasty burger not made of meat. In other words, it competed in the meat substitute category. Major players in vegetarian burger market were Garden burger, Morningstar Farms and Coca Burger had 88% of the market share. Remaining 12% of sales came from the small players in vegetarian burger business. NoBull burger had a major advantage of its burger as compared to other market players as it was made by using homemade process. Initially, Crissanne, the owner of NoBull burger and her daughter sold burgers through Charlottesville City Market and few local health food store and restaurants. Also, the demand for NoBull in Charlottesville market expanded, and it expanded to their reach to nearby cities. With huge promotional offerings, it won over the new locales and within few months’ word spread, and its demand increased drastically in Richmond and Washington DC. Since 2011, NoBull experienced huge growth with sales increasing 65% per quarter. As the company is getting calls from investors interested in finance, which means the company is growing. Its goal was to take NoBull Burger nationwide, given high demand and positive customer feedback; there was opportunity to do so.
The business was facing number of problems such marketing, distribution and cash flows issues. The major issue was its sales were rising at a rapid space, and NoBull was not sure if current production level will be able to cater the demand. NoBull needed to improve its operations to identify potential improvement to the current operation needed. Therefore, some analysis is needed in order to help NoBull’s goal to expand nationwide
NoBull had too much capital tied up and minimal cash in hand as it hesitated to take a step without understanding limits of their current operations.
It consists of four basic steps cooking lentils, cooking additional ingredients, creating burger mix and cooking burger and packaging and labeling the burgers.
It had one stove and one grill. Currently, it made only two varieties, original and mushroom. According to the analysis, the production process which Raymond chose was to focus on mushroom burger. Each batch consists of 80 burgers. Batch size is determined by grill space and pot sizes, as well as concerns about impact are greater in the quantity of the burgers per batch, as they could have been on the quality. One pot of lentils was used per batch of 80 burgers and a pot took around 45 minutes to cook. Up to four pots of lentils are cooked simultaneously on current stovetop. One pot of mushroom and one pot of onion required 80 mushroom burgers each. Each pot takes around 7 minutes to cut and prepare for cooking; also both pots are placed on the stove at the same time. Mushroom required 8 minutes and onion requires 12 minutes to cook. There was only space for two pots on the stovetop to be cooked at the same time. The ingredient was mixed together for 5 minutes. Grilling process required about 25 minutes per batch, this included time to mold each burger and place it on the grill. Vacuum sealer took 10 minutes per batch of 80 burgers to operate and required 5 minutes of preparation time to set up before each batch. Labeling process was manual and required 7 minutes per batch.
NoBull currently employs two cooks, five days per week for 5 hours per day. Cooks were paid $12 per hour. Raymonds assumed four packs of burgers were sold for $6 and the cost NoBull was $4.5. Out of that cost, $2.5 was for raw material and $2 for labor, rent, and other overhead costs.
NoBull sold four packs of burgers to multiple channels including Charlottesville City Market, Charlottesville’s Wholefood Market, Bodo’s Bagels and other local restaurants. Each had different cost and discounts associated with them, and most common channels were wholesale and Charlottesville City market...........................
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The big idea: In fall 2011, NoBull Burger, a new Charlottesville-based vegetarian burger company, was at a critical juncture in its development. The business faced a number of challenges as it continued to expand its sales outside the region. In particular, as the burgers increased in popularity, the owners were unsure as to whether production could keep pace with demand.
The scenario: NoBull was started by Charlottesville native Crissanne Raymond. Raymond 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. To launch NoBull, Raymond enlisted the help of two of her daughters, Heather and Elizabeth. Running a family business proved challenging. Heather noted, “[We were] always learning from the past . . . [asking ourselves] ‘how can we make this easier?’ because as we found, there’s always a better way.”
Early on, the Raymonds spent a significant amount of time promoting the business and identifying new markets. Initially, NoBull sold its handmade burgers through the Charlottesville City Market and to a few local health food stores and restaurants. But as NoBull saturated the Charlottesville market, demand spread, and NoBull expanded its reach to nearby cities such as Washington and Richmond and to larger retailers such as Whole Foods.
The Raymonds spent less time understanding NoBull’s operational capabilities. With an increase in demand, however, they began to worry whether NoBull had the necessary capacity to fulfill orders. NoBull’s kitchen was cramped, with limited space for cooks and equipment. To increase its capacity, the Raymonds explored automating portions of the burger-making process. For example, they identified an automated steamer that could cook the ingredients for the burger mixture in a fraction of the time required on a stove top. Still, they were unsure whether the investment made operational or financial sense. For help with NoBull’s operations, the family reached out to a group of students from the Darden School of Business.
The resolution: With the help of the students, the Raymonds determined NoBull’s existing capacity and identified potential process improvements for increasing production. The capacity constraint for the burger-making process turned out to be labor hours and not equipment. In addition, they found that grilling the burgers — not cooking the ingredients — was the process bottleneck. Therefore, buying an automated steamer would not increase the capacity of the existing kitchen because it would not increase the capacity of the constrained step. Instead, NoBull could increase its capacity by 20 to 25 percent simply by increasing the hours worked by cooks by one hour a day or by increasing the batch size of burgers cooked on the grill.
The lesson: Determining the capacity requirements of your operations sounds obvious but is often overlooked by new businesses, which are so focused on growth that they lose sight of the importance of operations and execution. When scaling an operation, it is important to first understand your existing capacity before making financial commitments. Often, easy fixes exist that cost less and are less disruptive to operations.
Kraft is an assistant professor of business administration at the University of Virginia Darden School of Business. This article is based on a case study, “NoBull Burger,” written by Darden MBA students Merritt Osborn and Elizabeth Tang.