Ada’s Café

Ada’s Café

Palo Alto, CA
Round –
Spring-Summer 2015
Project Type –
Fast track
Project Focus –
Operations Review, Strategic Planning
Organization Type –
Community or Economic Development, Education, Human Services
Organization

Ada’s Café is a café and catering business providing meaningful employment to adults with disabilities. The Café enables its employees to learn useful skills in food preparation, customer service, money handling, and clean-up. The organization’s principals have an impressive history of operating school cafes staffed by special education students, and they have pursued Ada’s Café as a commercial extension of those school-based operations. The Café plans to achieve commercial success while competing against for-profit entities by delivering local community values to its customers and offering compassionate employment opportunities for its employees. One the organization’s key goals is to bring people together that usually do not have an opportunity to connect. 

Situation

Ada’s Cafe was awarded a contract to open their café in the new Mitchell Park Community Center in Palo Alto. While waiting for construction of the Center to be completed, the Café developed an on-going catering business. Ada’s Café opened in the Center on December 6th, 2014, and it has enjoyed early success in building a lunch-hour clientele and is rapidly becoming a popular community gathering spot. While foundations and major donors have largely been funding the Café’s build-out and start-up operations, the organization expects increased revenue growth from café operations. As the Café’s reputation grows and its management skills mature, the organization is looking towards opening more locations.

Project Objectives

Ada's Café asked the ACT team to determine operational changes that will allow Ada’s to reduce labor and input costs, increase revenues, and achieve financial self-sufficiency, as well as determine whether Ada’s should expand to new locations at this time and what changes would need to occur to support expansion.

Project Overview

The ACT team began with an extensive research phase in order to understand the key drivers of the business and to provide practical recommendations. The team's research included catering kitchen observations, café observations, and interviewing customers and board members. The team also examined staffing practices, food purchasing practices, and opportunities for revenue growth. 

Furthermore, the ACT team conducted a detailed financial and POS analysis, understanding and summarizing labor costs, input (food) costs, and traffic patterns vs. staffing, then modeled the potential financial impact of reducing certain costs.

Finally, the team developed operational recommendations, assisted in the implementation of “quick wins," and analyzed expansion opportunities and provided recommendations for needed changes.

Key Recommendations

- Pursue operational changes that will enable Ada’s to reduce its labor and input costs:

  • Streamline the menu
  • Improve process flow behind the counter, including clear division of labor
  • Staff according to traffic patterns (vs. individual needs)
  • Improve food purchasing accuracy and frequency
  • Standardize food/recipe production

- Reallocate management responsibilities and bring in administrative talent to support the leadership team

- Ada’s should pursue additional expansion opportunities when a similar model can be achieved and when operational processes can be extended to the new location(s)

Final Report Outline
  • Research process
  • Summary of observations and recommendations
  • Organizational structure recommendations
  • Recommendations for increasing revenue
  • Pro forma cost model and financial analysis
  • Opportunities to reduce labor costs
  • Opportunities to reduce food costs
  • Evaluation of expansion opportunities