Trying to put marketing in the mix
At Kookie Krazy Inc. in Thousand Oaks, where customers make their own oversized cookies, co-owner Mark Boos Benhard aims to re-create the magic of the original “Willy Wonka & the Chocolate Factory” movie that captivated him as a child.
The colorful store and party spot offers hands-on immersion in all things sweet, with six flavors of cookie dough, dozens of tasty bits to mix in and a post-baking trip to the toppings bar featuring chocolate syrup, sprinkles and other goodies.
“We really wanted to create something that could tap into a child’s idea of ‘no limit to possibilities’ and ‘everything is edible,’ ” said Benhard, 44, who grew up nearby with a garage full of candy boxes, thanks to his stepfather, a sales executive at a major candy company.
Milkshakes and ice-cream sandwiches, cookie cakes, gift baskets and ready-to-go cookies are also on the menu. The cookie dough, made with pasteurized egg whites from nearby Eggology Inc., is safe to eat uncooked; the shop even sells cups of raw dough to snack on.
Co-owner James J. Kelley, 45, who has been an avid cookie baker since grade school, supplied the recipes for the venture the lifelong friends cooked up in 2006.
They opened their doors a year ago in the Janss Marketplace outdoor shopping center with an initial investment of $250,000. It was summertime and business boomed with kids, families and dating couples looking for low-cost fun. “We were screaming busy, meeting or exceeding all expectations,” Kelley says.
Kookie Krazy, which charges $4.99 for the custom cookie experience, soon reached the break-even point, in which sales cover costs. The start-up business attracted interest from venture capitalists. And the snappy graphics and sophisticated branding, coupled with a unique concept, lured potential franchisees.
Sales hit $106,000 in the company’s first fiscal year, which ended last month. The owners estimate 20,000 customers have visited the shop or celebrated a birthday in the party room.
Still, those numbers would be much higher if the bottom hadn’t fallen out of the global economy last fall, the owners say. Their once-bustling mall location turned quiet as tenants closed and kids headed back to school.
“So suddenly we now have a location that is no longer getting foot traffic and is not visible to the street,” Kelley says. “Business dropped off dramatically.”
That made it hard to meet the benchmarks for sales, profit and advertising spending that the venture capitalists wanted. To start the franchise process, the owners were shocked to learn, they would have to shell out $24,000 to $40,000 to prepare the necessary legal documents.
And $50,000 set aside for marketing was eaten up by last-minute building costs. That was particularly frustrating for Benhard, who runs a marketing and public relations business in addition to his Kookie Krazy duties.
“I just know we could be the next big thing if we had the money to get the word out,” he says.
Kelley also owns another business, an insurance agency.
Business consultant Roberto Barragan, president of the nonprofit Valley Economic Development Center, and public relations practitioner Colleen Farrell say low-cost steps could help Kookie Krazy succeed in its current location and position itself for expansion when the economy turns around. Already, “it is organized in a way that can be hugely successful and imminently franchiseable,” Barragan says.
Here is a summary of their recommendations:
* Raise additional money. Barragan advises the owners to go back to their original 20 investors to raise enough money to spend $5,000 each month during the crucial summer season for marketing. The message should be that the small sum is needed so the shop achieves the success it needs to move to the next stage.
* Consider a loan. The business would probably qualify for a small loan of $20,000 to $35,000, such as the ones offered by Barragan’s organization. The owners say they are hesitant to take on more debt but don’t want to lose the $400,000 invested in the store so far for want of a modest sum to pay for marketing.
* Postpone franchising. Barragan recommends they hold off on actively pursuing franchising until the economy improves. He suggests they turn to an angel investor toward the end of the year to fund the franchise paperwork fees.
* Continue landlord negotiations. Barragan echoed the owners’ concern about diminished foot traffic. “I am dealing with a lot of businesses going through tough times right now,” he says. “And the ones hanging on are the ones who have landlords who are working with them, landlords who are smart enough to understand it’s better to have a business there and collect some rent and defer some rent than to have an empty space.”
* Focus on the core business. The owners have been considering whether to pursue other ways to increase revenue, including wholesale baking. Barragan suggests they use their limited time to increase sales of the create-your-own-cookie experience and parties. Those sales are key to making the profit the shop needs to succeed and become a franchise model.
* Revise marketing plan. Farrell suggests that the owners create a pared-down summer marketing plan. It should include their best ideas, a weekly action plan and a formal system for tracking response.
* Jump into social marketing. Set up an account on Facebook where fans of Kookie Krazy can post pictures, videos and comments. Promotions could include weekly contests to win a free cookie. Link to the shop’s website, at www.kookiekrazy.com. Don’t be scared off by the potential for negative comments, Farrell says.
“That’s one of the things you have to be prepared for in order for it to be authentic,” she says. “But you can go back and address that response.”
* Pump up editorial coverage. Kookie Krazy is perfect for print, radio and television coverage, Farrell says. The fun concept will appeal to parenting, lifestyle and business-oriented magazines, websites and blogs. Local radio stations might be receptive to a promotion that supplies cookie party giveaways to listeners who call in to describe their perfect cookie ingredients, she says. Farrell also suggests contacting locally based national television shows, such as “The Ellen DeGeneres Show,” that look for fun audience-participation ideas.
* Offer fundraising nights. To raise awareness among local families, Kookie Krazy could offer local schools, children’s charities or other children’s groups nights at the shop where a portion of the proceeds goes to their organization or another group, Farrell says.
* Tap low-cost help. Benhard, who already guest lectures at a marketing class for a local college, could arrange for academic credit for a student intern or two to help carry out some of the marketing projects, Farrell says. The hourly salespeople at the shop could also be trained to take on some of the tasks during slow times at the store, she says.
“They have a great concept and they have a real passion for what they are doing,” Barragan says. “I say, hold on, guys, you are almost there.”
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(BEGIN TEXT OF INFOBOX)
Kookie Krazy Inc.
COMPANY SNAPSHOT
Business: Kookie Krazy is a create-your-own-cookie store and party venue in Thousand Oaks.
Owners: Mark Boos Benhard and James J. Kelley
Employees: 10, part-time
Revenue: $76,000 in 2008
Founded: May 2008
Start-up funds: $250,000 in personal savings and funds from family, friends and small investors
CHALLENGES
Finance the marketing plan and overcome a poor location.
GOAL
To double sales and franchise the concept.
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Meet the experts
ROBERTO BARRAGAN
Roberto Barragan is president of the Valley Economic Development Center, a seven-office small-business development nonprofit based in Van Nuys. The organization provides financing, training and assistance to thousands of local businesses each year. Previous experience includes work in minority and non-minority businesses, start-up company market strategy development, feasibility studies and development of nonprofit coalitions.
COLLEEN FARRELL
Colleen Farrell is a media consultant with a background in consumer media as a public relations practitioner and broadcast journalist. Most recently she was a member of the PR account team in the Santa Monica office of Allison & Partners, working on campaigns for Sony Electronics Inc., Digital Blue Corp. and other clients. Previously, she was an account executive at GolinHarris’ Los Angeles office for Nintendo of America Inc., Nestle Wonka and others. She began her career as a broadcast journalist in Washington and Oregon.
