Student-run store gets hard lesson in lost profit
Tiger’s Den, the student-run snack bar at South Pasadena High School, has watched its profit plummet by more than half this year after a law banned junk food sales in California public schools and forced it to yank its best-seller, AriZona ice teas.
The shop is open 30 minutes a day during the school lunch break, and it has made about $6,000 in profit this year. That’s compared with $14,000 at this point last year.
The student managers blame the law’s July 1, 2009, deadline, by which time high schools had to exorcise sodas, including diet varieties, and other sugary drinks. Elementary and middle schools had earlier deadlines.
“It puts us in a hard place because we can’t change the minds of students,” said junior Mayan Schexnayder, chief executive of the student business. It rang up sales of $35,567 during the nine months of the previous school year.
Sugar-filled sports drinks are still allowed because they are considered electrolyte replacement beverages. But that’s not what most students want to drink with their lunches, said Schexnayder, nor low-fat milk or the 100% fruit juices the store sells.
For the students, it’s been a real-life business lesson on the risk of relying on a star product and on the power of lawmakers to wreak havoc on small companies.
Tiger’s Den is one of four companies run by the small-business classes taught by Cathy Mason. There are 55 students in her two classes. All work in the student businesses. They don’t get paid, but some of the profits are used for college scholarships for them.
The shop sells drinks, ice cream (low-fat) and chips (baked), among other snacks, from four ticket windows near a courtyard where students congregate during lunch.
Customer volume has dropped to about 50 people a day, down from about 200 last year when Tiger’s Den sold the popular AriZona iced teas, Mayan said. Students loved the low cost -- 99 cents -- and large size of the teas, he recalled.
Tiger’s Den has tried to find a substitute, adding $3 Odwalla smoothies and Neuro water. It recently offered samples of Vita Coco water and is working with a local catering company to stock basic sandwiches in a bid to boost sales.
Not good enough, says Scott Feldman, president of the South Pasadena Chamber of Commerce, who was asked to review the snack bar’s challenges.
“Vita Coco? Neuro water? These sound like medicinal drinks,” said Feldman, a school parent who used to own a marketing company.
Feldman was impressed with their students’ enthusiasm, number-crunching abilities and business research. Although they have some vendor restrictions, Feldman said there are a number of steps they can take to improve sales.
Don’t stray from the core business. Focus on selling snacks, not meals. Drop the sandwiches. Don’t compete with the cafeteria, he said, and instead “work synergistically, and see if you can negotiate an exclusive, great new drink in exchange for not selling sandwiches.”
Be proactive about finding the next blockbuster product. “I’m sure there is a product in this day and age that is both healthy and marketed to teens so it’s totally cool. So go find it and get it, then create a buzz around it,” Feldman said.
Try new marketing and merchandising ideas. Set up a Facebook page to promote the snack bar. Fill a metal bucket with ice, stocking it with drinks and setting it next to a store window to entice thirsty students. Get a permanent sign. Work with other student groups on cross-promotions.
Offer bottled water with a Tiger’s Den label to give students a reason to choose the snack bar over vending machines or the cafeteria. Set up more tastings and giveaways.
Bring back the store’s former ice cream push cart, stock it with cold drinks, and perhaps sell them campus-wide.
Making up lost sales won’t happen overnight, Feldman said, but in the meantime the students have actually benefited in their core mission: to learn about business.
“You just got delivered a nasty-gram and you will always remember what it was like to lose 50% of your revenue and how hard you had to work to make it up,” he said. “There is no difference between that and what happens to businesses in the real world.”
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